Single store revenue exceeds 100 million, old store Golden Rush Hong Kong Stock IPO

After Mengjinyuan, another gold company continues to push for a Hong Kong IPO.

On May 13, Lao Pu Gold Limited (referred to as "Lao Pu Gold") updated its prospectus on the Hong Kong Stock Exchange website. It first submitted its application in November 2023, with CICC as the exclusive sponsor for Lao Pu Gold.

The process of Lao Pu Gold entering the capital market has been somewhat tortuous.

In June 2020, under the sponsorship of Huatai Securities, it applied to the CSRC for listing on the Shenzhen main board. However, when it was reviewed in August 2021, it was rejected by the CSRC.

Subsequently, in February 2022, Lao Pu Gold hired CICC as the sponsor and once again submitted an application for listing on the Shenzhen main board in June 2023. However, just one month later, it hastily withdrew the application, marking another failure in its A-share listing.

Prior to turning to the Hong Kong Stock Exchange in November 2023, Lao Pu Gold completed a round of Pre-IPO financing. This was the only round of financing conducted by Lao Pu Gold in the primary market before its IPO:

Black Ant Capital subscribed to 2.66 million shares of Lao Pu Gold for 97 million RMB, accounting for 1.86% of the total share capital; Suzhou Yimochuangye Investment Partnership Enterprise (Limited Partnership) under Yuyuan Stock (600655.SH) and Hangzhou Fuxing Hanxing Equity Investment Fund Partnership Enterprise (Limited Partnership) collectively subscribed to 3.49 million shares for 128 million RMB, accounting for 2.45% of the total share capital.

The post-investment valuation reached 5.225 billion RMB, with a PE ratio of 12.56, lower than the rolling P/E ratio of the WIND Gold and Jewelry Index above 18 at the same period.

It is worth mentioning that under Yuyuan Stock, there is another brand called Laomiao Gold, which is similar in positioning to Lao Pu Gold, both focusing on traditional gold craftsmanship. It is the fifth largest brand in the gold market, with a market share of 7.6% in 2023.

Different from popular brands like Mengjinyuan and Laofengxiang (600612.SH), Lao Pu Gold is positioned as a high-end gold and jewelry brand.

According to Frost & Sullivan data, in 2023, among all gold and jewelry brands in China, Lao Pu Gold ranked first in single-store revenue.

In 2023, Lao Pu Gold achieved revenue of 3.18 billion RMB through 30 self-operated stores, a significant increase of 145.75% year-on-year, with an average store revenue exceeding 100 million RMB.

In comparison, Mengjinyuan, which is also in the queue for a Hong Kong listing, had a single-store revenue of only about 7 million RMB.

In 2019, Lao Pu Gold took a different approach and pioneered the traditional gold track, being the first to set diamonds on foot gold, subverting the industry tradition of using K gold as the base material for diamond jewelry, enabling it to sell at a higher brand premium.

In terms of store location, Lao Pu Gold targets top domestic business districts for store openings.

As of April 2024, Lao Pu Gold has opened 8 stores in the top ten high-end department stores nationwide. Among them, the store in the "store king" Beijing SKP contributed revenue of 336 million RMB to Lao Pu Gold in 2023, accounting for approximately 10.57% of its annual revenue After becoming neighbors with luxury jewelry brands like Tiffiny, the old gold shop can now sell at higher prices.

In 2023, the average selling price of pure gold products at the old gold shop reached 729 yuan/gram, while the average selling price of gold-inlaid products soared to 1043 yuan/gram, even about 50% higher than the recent peak price of gold jewelry at around 700 yuan/gram.

In contrast, competitors like Dream Gold Garden can only earn processing fees of 20-50 yuan/gram when selling gold jewelry.

In 2023, the old gold shop achieved a net profit of 416 million yuan, a year-on-year increase of 114.57%. The gross profit margin reached 41.9%, while the net profit margin significantly increased by 5.79 percentage points to 13.09% year-on-year.

For comparison, during the same period, Lao Feng Xiang had a gross profit margin of 8.3% and Dream Gold Garden only had 5.33%.

In this Hong Kong IPO push, the old gold shop plans to raise funds for expanding its sales network (including opening 35 stores in first-tier and new second-tier cities in mainland China, as well as opening 12 new stores in overseas markets); maintaining brand positioning and improving brand loyalty; enhancing information technology levels; strengthening research and development capabilities; and supplementing working capital