As gold price volatility looms as a risk, LAOPU GOLD's growth story is being rewritten. HSBC's latest research report highlights that the company's growth is no longer driven by the "gold flywheel" of rising gold prices but by a "luxury flywheel" powered by brand strength.

On November 12, HSBC noted in its report that LAOPU GOLD's growth logic is shifting from reliance on gold price appreciation to a "brand flywheel" fueled by craftsmanship, cultural storytelling, and brand equity. This transition suggests the company could break free from gold price cyclicality and evolve into a true luxury brand. Its valuation should align with Western luxury giants like Tiffany and Richemont rather than traditional Chinese jewelers, signaling significant revaluation potential.

The report also points out that recent gold tax reforms, seemingly negative, may instead serve as a catalyst for LAOPU GOLD to further capture market share from weight-based pricing competitors.

HSBC initiated coverage on LAOPU GOLD with a "Buy" rating, setting a target price of HK$973.70 based on a DCF model—a 55% upside from the current price (HK$628.00 as of November 5, 2025).

**Growth Myth: The Powerful Start of the "Gold Flywheel"** Since its June 2024 IPO, LAOPU GOLD's stock has surged nearly 800%, initially driven by a robust "gold flywheel":

- **Fixed-Price Model**: Unlike traditional jewelers selling by weight, LAOPU GOLD adopts a fixed-price strategy. - **Gold Price Surge Boosts Demand**: As gold prices soared, the premium per gram of its products narrowed relative to spot prices, stimulating demand. - **IPO Capital Boost**: Proceeds enabled rapid inventory expansion to meet surging sales, accelerating turnover.

Under this flywheel, sales are projected to grow 8x from 2023 to 2025—a result of gold’s bull cycle, unique business model, and capital injection.

**Future Engine: The "Brand Flywheel" Takes Over** While the "gold flywheel" delivered explosive growth, HSBC believes long-term value lies in the emerging "brand flywheel." Despite gold hitting a record $4,350/oz in October 2025, LAOPU GOLD has leveraged its initial momentum to build brand equity. Key drivers include:

- **Craftsmanship & Cultural Narrative**: Products blend traditional Chinese artistry (e.g., hammering, engraving, filigree) with modern aesthetics, positioning them as heirloom art. - **High-End Clientele & VIP Services**: 77.3% customer overlap with top global luxury brands (per Frost & Sullivan); VIP teams launched in 2025 to serve ultra-high-net-worth clients. - **Strategic Retail Expansion**: 48 boutiques in premium malls (e.g., Beijing SKP, MixC) achieve China’s highest sales per square foot among jewelers. - **Global Ambitions**: First overseas store opened in Singapore (2025), with 3–4 more planned for 2026–27 under a "global luxury brand" strategy.

This flywheel, HSBC argues, will grant pricing power, insulating LAOPU GOLD from gold volatility and elevating it as China’s first global luxury jewelry contender.

**Valuation: Benchmarking Global Luxury Peers** HSBC’s bullish forecasts include: - **Short-Term Surge**: 2025 net profit +218%, revenue +199% YoY. - **Long-Term Growth**: 2025–27E net profit CAGR of 29.5%, revenue CAGR of 23.1%.

The bank asserts LAOPU GOLD’s valuation should mirror global luxury peers (average forward P/E of 27x) rather than domestic jewelers (13x). At 26.2x 2026E P/E, the target price implies untapped luxury-brand upside.

**Gold Tax Reform: A Double-Edged Catalyst** New rules (effective November 1, 2025) require VAT on non-exchange gold sales and cut input VAT credits from 13% to 6%. HSBC sees this as a tailwind: LAOPU GOLD’s fixed-price products, with higher margins, can absorb costs better than weight-based rivals forced to raise prices. This may narrow price gaps, driving more consumers to its art-infused, value-preserving pieces and accelerating market share gains.