Nomura: Lao Pu Gold sales remain weak; earnings forecasts and target price cut

Why do sales remain under pressure?

Nomura estimates that Lao Pu Gold’s sales momentum in the third quarter of 2026 showed no clear improvement from the second quarter, when revenue had already fallen by about 30% year on year.
The bank believes that a marked correction in gold prices during the third quarter weakened demand from entry-level, non-core consumers. Spot gold at one point approached 4000 US dollars per ounce and reached a new low for 2026 in October.
Nomura also believes that the negative wealth effect from the pullback in A-shares, particularly technology stocks, since July, and stricter tax measures targeting China’s wealthy have affected the target customers’ willingness or ability to spend.

Nomura cut its 2026 revenue forecast from 37.599 billion yuan to 31.795 billion yuan and its net profit forecast from 7.006 billion yuan to 5.749 billion yuan, reductions of approximately 15% and 18%, respectively.
Under the new model, 2026 revenue still rises 16.5% from 27.303 billion yuan in 2025; however, revenue growth falls to 3.4% in 2027, with net profit forecast at 5.966 billion yuan, up approximately 3.8% from 2026. The bank also cut its revenue and earnings forecasts for 2026 through 2028 by 15%–26% and 18%–28%, respectively.
Cash flow is also an important operating constraint: the company’s operating cash flow was negative 6.848 billion yuan in 2025, and Nomura expects it to turn positive at 7.085 billion yuan in 2026. Inventory is forecast to decline from 16.044 billion yuan at the end of 2025 to 13.871 billion yuan at the end of 2026.

Nomura believes Lao Pu Gold enjoys strong consumer recognition in traditional-craft gold jewellery and collectibles, and its established core customer base is expected to support long-term sales.
In recent quarters, the company has continued relocating boutiques to better locations and strengthening product development and quality control. Nomura believes these measures benefit long-term brand building, but may not immediately deliver strong sales growth.
Alongside the decline in earnings expectations, Nomura cut its target 2026 price-to-earnings multiple from 20 times to 12 times, lowering its corresponding target price from 905 Hong Kong dollars to 450 Hong Kong dollars. Compared with the closing price of 274 Hong Kong dollars on 3 November, the new target implies approximately 64% upside; the bank maintained its Buy rating.