Laopu Gold: Profit resilient, cash improved amid gold pullback

研报英文原文证据摘录

Laopu Gold: Profit resilient, cash improved amid gold pullback

Sales or GPM – what's the market focus? With Laopu's sales positively correlated

with gold price while GPM negatively, we analysed the correlation between Laopu's

stock price and gold price to understand market focus during different time periods.

Since its IPO until May 2025, Laopu's share price has been positively correlated with gold

price with correlation at around 1, suggesting that the market is focusing fully on sales

performance. Since May 2025, and especially since July 2025, the market has been

increasingly concerned about GPM pressure amid higher gold prices, with correlation

turning negative to -0.6. The relationship reversed again to a positive correlation of 0.9

YTD, as the market has been concerned about demand pressure when gold prices

decline, supporting our belief that the market has fully priced in the sales pressure but

neglected the potential GPM upside.

Figure 3: YTD, the market is focusing more on sales than GPM

re on

ng mo PM

ocusi

n G is f

tha ket

mar es

he

sal , t

YTD

Source: Thomson Reuters, Shanghai Gold Exchange

Potential operating deleverage and VIC

investments more than offset by GPM expansion

Laopu's GPM followed a similar trend and remained 26ppts below CFR's during 2021-

25. However, the OPM gap narrowed significantly from 21ppts in 2021 to 7ppts in

2025, which we mainly attribute to operating leverage. This raised market concerns that

negative SSSG could materially pressure Laopu's store-level profitability. Our analysis

indicates that as rental expenses increasingly shift towards variable payment formats,

the impact of Laopu's operating leverage and deleverage has diminished, as reflected in

slower margin expansion in 2025 despite accelerating SSSG and store growth.