After going public, the stock price increased 18 times, and the old shop Gold became the top trend.

As the first stock of Traditional Gold, $LAOPU GOLD(06181.HK)$ Since its listing, the stock price has multiplied by 18 times, earning the reputation of being the "Hermès of the Gold Industry." The surge in its stock price is backed by solid performance, with the latest announcement revealing astonishing growth in revenue and profit for 2024, achieving increases of 167.5% and 253.9%, respectively. What magic does this old shop possess that allows it to create such a unique competitive advantage? This week's opportunity will be shared in the quick course.

High-end Launch of the Old Shop

High-end Brand Positioning

As a pioneer in the field of traditional Gold in China, Laopu Gold specializes in the design, production, and sale of traditional Gold products. Established in 2009, the company was formerly known as 'Golden Treasure.' Its founder, Xu Gaoming, has a notable background, having engaged in cultural tourism and precious metal jewelry businesses for many years, and is a seasoned industry veteran who understands both products and consumers in the high-end market.

Old Shop is positioned as "High-end Luxury Goods," combining cultural and fashionable attributes, which is distinctly different from traditional gold jewelry brands. Traditional brands typically price based on material value + craftsmanship value, while Old Shop uses a "fixed price" model. This pricing mechanism, combined with product power + brand power, creates a space for high premiums, allowing it to somewhat escape the influence of gold prices and thus maintain stable profitability.

Mastering pricing power is an essential condition for becoming a Luxury Goods brand. In recent years, the continuous rise in Gold prices and the soaring costs of raw materials have put pressure on traditional Gold product merchants, but Laopu's sales and prices have steadily increased. This counter-cyclical characteristic is similar to premium brands like Chanel and LV – regardless of changes in the economic environment, their popular products remain in high demand. Currently, the lines in front of Laopu stores and those of Chanel and LV are likely overlapping, reflecting the brand's precise reach to Luxury Goods consumers: by creating product scarcity and cultural value, guiding consumers to form a value identity and reinforcing pricing power through regular price increases, further solidifying its Luxury Goods positioning.

The product matrix is rich.

The old shop has built a product system covering daily accessories, daily gold items, and precious ornaments, precisely aligning with the diverse consumption scenarios of high-net-worth individuals. According to public data, its product price segments are divided as follows: under 0.01 million yuan (10%), 0.01-0.05 million yuan (65%), 0.05-0.25 million yuan (19%), and above 0.25 million yuan (6%), forming a clearly structured income framework.

• Daily accessories: characterized by lightweight and low price, integrating traditional cultural elements such as Buddhism, Taoism, and folklore, designed exquisitely with meanings of peace and auspiciousness, primarily aimed at young female customers, meeting daily wearing needs.

• Daily gold items: Made with high-weight gold combined with materials such as enamel, integrating Eastern classical aesthetics, while possessing both practicality and artistic collection value, targeting middle-aged men with strong purchasing power.

• Precious ornaments: Characterized by heavy weights and high prices, covering symbolic shapes such as the God of Wealth, Golden Bull, and Bodhisattva, focusing on wealth symbolism and status enhancement, predominantly used for collection, gifting, or business occasions, serving the highest-end consumer groups.

Of course, regardless of which product series it is, the old shop perfectly integrates traditional craftsmanship with modern aesthetic art, and builds themed lines around brand stories, such as Buddhism, Taoism, and folklore, launching a small number of new models each year for each line to solidify brand recognition while attracting user repurchase.

Deeply cultivating self-operated channels.

As of the end of 2024, the old shop has opened 36 self-operated stores in 15 cities, and is expected to continue to grow. Currently, all stores adopt a fully self-operated model, strictly controlling product quality and service quality. In terms of store location, they mainly cover high-end malls in first-tier and new first-tier cities, concentrated in the basement and first floors of high-end shopping centers, adjacent to international luxury brands, leveraging the reputation of the business circle to attract traffic to the stores.

Taking the Shenzhen area as an example, the old shop has three stores in total, distributed mainly in Hi-tech Park Vanke Mall, Qianhai Vanke Mall, and Luohu Vanke Mall. The stores uniformly adopt a design of traditional Chinese classical study scenes, with meticulous planning from spatial design, display layout to lighting and sound effects, creating a high-end brand image.

Additionally, in terms of overseas expansion, in 2024, the established brand will successively enter Hong Kong and Macau, and will use Singapore as the first stop for going abroad, planning to gradually cover the Southeast Asian market and initiate an international layout. The internationalization of the established brand is not only about market expansion but also represents a collective awakening of Chinese Luxury Goods brands, which is expected to establish a "Chinese benchmark" in the global Gold and jewelry market, and is worthy of our attention.

The growth code of CHOW TAI FOOK.

Core revenue high growth.

Starting from 2023, CHOW TAI FOOK has experienced a surge in revenue, with an annual growth rate continuously breaking 140%. Especially in 2024, revenue reached 8.5 billion yuan, an increase of 167.5% compared to 2023, setting a historical record; net profit also significantly increased by 253.9%, reaching 1.473 billion yuan.

The core reason for rapid growth is the continuous expansion of brand influence, fast store expansion, product iteration and updates, and the upgrade of consumer concepts.

• Brand penetration rate improvement: Due to the brand's continuous emergence, the loyal members of the old stores (those who have purchased once or more) increased to about 0.35 million, a significant growth compared to 2023. The expansion of the consumer group has directly promoted the growth of same-store revenue, with a same-store revenue growth rate exceeding 120.9% in 2024, demonstrating strong user stickiness.

• Store expansion effect: Compared to 2023, the old store added 7 new stores and optimized and expanded 4 stores. The new stores include flagship stores in Hong Kong, Beijing Guomao, and Shenzhen MixC, which directly contribute to incremental revenue. In comparison with international high-end jewelry brands such as Cartier and Bulgari, which have over 100 stores in China, the old store only has 36. If the brand adjustment can elevate to an international first tier in the future, there will be immense potential.

• Product iteration: The old store's products are continually innovating, led personally by founder Xu Gaoming in research and development. Both the R&D capabilities and financial investment are strongly assured. By the end of 2024, the old store has created nearly 2,000 original designs, having 249 domestic patents, 1,314 copyrights for works, and 228 foreign patents, all of which are core competitiveness that brings pricing power to the products.

• Upgrade in consumption philosophy: In recent years, with the economic downturn, Gold, as a safe-haven investment, has gained popularity, and the philosophy of high-end consumers is also changing, with value preservation becoming an important focus. The old store combines Gold's 'hard currency property' with the 'spiritual symbol' of luxury goods, forming a stronger appeal than traditional luxury goods (like handbags), creating a trend-following consumption effect.

In summary, the old store's revenue comes from brand influence and the expansion of consumer scale. In the future, we can focus on whether the company's store openings are smooth, and whether the revenue growth of single stores and overall revenue is stable.

Profitability is excellent.

In terms of profitability, the old shop has consistently maintained a high gross margin, remaining above 40% in recent years. In 2024, a gross profit of 3.501 billion yuan was achieved, with a gross margin of 41.2%. Although this represents a year-on-year decline of 0.7%, it still leads peers like CHOW TAI FOOK by 20%. The main reason is that the old shop adopts a fully self-operated model and has relatively free pricing power, resulting in a relatively high gross margin. Additionally, the company's net profit for 2024 was 1.473 billion, with a net profit margin of 17.3%, a year-on-year increase of 4.2%, setting a new historical high.

The improvement in the company's profitability is attributed not only to the stable high level of gross margin but also to the optimization of costs. Thanks to improved operational efficiency and increased single-store sales revenue, the company's overall expense ratio (including selling expenses, administrative expenses, R&D expenses, and financial expenses) has continued to decline, ultimately reflected in the increase in net profit margin.

In summary, the profitability of the old shop is still very excellent, and we can continue to monitor the growth changes in its gross margin and net profit margin.

Stock price trend analysis.

Since its listing last year, the old shop has maintained a strong upward trend, especially after releasing the latest results on March 31, where both volume and price increased, setting a historical high of 881 yuan and approaching the 1000 yuan mark. From a technical perspective, there is no obvious Resistance above the stock price, which is currently well positioned above the EMA 12-day moving average (current support level is about 730 yuan), and short-term pullbacks can be seen as layout opportunities.

It is important to note that the old store belongs to newly listed stocks, and will face the largest scale of restricted stock release after listing on June 28 of this year. The 12 shareholders before the company's listing collectively hold 142.6425 million shares, accounting for 86.44% of the total share capital of the company. The release of this portion of shares may lead to an increase in market supply, thereby exerting pressure on the stock price. Investors need to cautiously assess the potential impact of the release on the stock price and prepare accordingly for investment.

Risk Reminder

1. Industry competition is intensifying: As the high-end Gold jewelry market continues to expand, more and more competitors are entering the market, especially internationally renowned brands and traditional domestic brands. This will intensify market competition, affecting the market share and gross margin of old stock Gold.

2. Gold price fluctuations: Although the old stock has a certain degree of pricing power, fluctuations in Gold prices will still affect the product costs and selling prices of old stock Gold. If Gold prices fall sharply, it may affect the company's asset value and profits.

3. Release of lock-up shares: After the release of lock-up shares, the market circulation shares will increase significantly, which may trigger stock price fluctuations.

The success of old stock Gold is essentially a business model of "cultural value luxury goods". Its ability to continuously replicate advantages in store expansion, product innovation, and internationalization will determine whether it can join the ranks of the world’s top jewelry. Investors should focus on tracking the progress of store openings, profitability of individual stores, and changes in gross margin to seize long-term value growth opportunities.

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Risk and disclaimer notice: The above content does not constitute any financial marketing or investment invitation, nor does it constitute any investment advice. Before making any investment decision, investors should consider the risk factors related to investment products based on their own circumstances and consult a professional investment advisor if necessary.