Daiwa: Initiates coverage on LAOPU GOLD with a "Buy" rating and a target price of HKD 950
Daiwa has given LAOPU GOLD a "Buy" rating with a target price of HKD 950, based on a price-to-earnings ratio of 22 times the earnings per share for the fiscal year 2026. Daiwa believes the market has underestimated LAOPU's brand strength and growth potential, and the current price presents a good opportunity for investors. It is expected that LAOPU's net profit will grow by 207% year-on-year in the second half of this year, and by 32% in the fiscal year 2026. Daiwa is confident in LAOPU's ability to build luxury brands and believes its network can expand by at least 50% in the long term
According to the Zhitong Finance APP, Daiwa has released a research report stating that it has given LAOPU GOLD (06181) a "Buy" rating, with a 12-month target price of HKD 950, based on a target price-to-earnings ratio of 22 times, applied to its earnings per share for the fiscal year 2026. Daiwa believes that the market has underestimated the combination of LAOPU's brand strength, growth profile, and disciplined expansion strategy, and the current price provides a good entry opportunity for investors.
The stock seems to be weighed down by two major non-fundamental factors (1. concerns about another stock placement; 2. continued selling from the stock incentive platform), and the previously leading valuation premium over peers has completely disappeared. Although the possibility of occurrence cannot be ruled out, it is believed that the current price has reflected short-term risks and created an attractive long-term risk-return profile. Daiwa expects LAOPU's net profit to grow by 207% year-on-year in the second half of this year and by 32% in the fiscal year 2026.
From a fundamental perspective, Daiwa believes that LAOPU stands out due to its deep understanding of luxury brand building in the Chinese market, a capability recognized by global leaders such as LVMH and Swiss luxury goods company Richemont. The management's track record in strategic transformation, focus on sustainable growth, and first-mover advantage in securing prime luxury mall locations in major Chinese cities give Daiwa confidence in its ability to establish lasting brand appeal, believing that its network can expand by at least 50% in the long term
