Laopu Gold Co. experienced a $2.1 billion loss in market value on Tuesday, with its Hong Kong-listed shares dropping nearly 24% to HK$302.20 ($38.5). This decline, the most significant since its June 2024 listing, followed the Chinese jeweler's projection of first-half 2026 revenue growth between 60% and 66%, reaching 20.5 billion yuan. While the company also anticipated a substantial increase in non-IFRS adjusted net profit, rising 83% to 85% to as much as 4.36 billion yuan, investors reacted negatively to the slowing sales outlook.
The market's reaction indicates that even robust growth figures can disappoint investors when they fall short of previous sky-high expectations. Analysts note that Laopu Gold's shares had previously seen a meteoric rise, increasing 27 times to a high of HK$1,108 last July, partly driven by a P/E ratio of 144 times. The current growth rate of 83% to 85% for net profit, while impressive in isolation, was seen as a significant slowdown compared to profit increases of 254% in 2024 and 230% last year.
This downturn comes amid broader concerns about Laopu Gold's momentum, with monthly sales in its physical stores declining by mid-double digits year-on-year between March and May, according to data from BigOne Lab. The company's stock has now fallen nearly 70% from its all-time high, erasing approximately HK$120 billion ($15.3 billion) in market value due to a retreat in global bullion prices from record levels. Although global banks like JPMorgan Chase & Co., Nomura Holdings Inc., and UBS Group AG remain bullish on Laopu Gold's brand strength and affluent customer base, the falling gold prices and a sharp 80% quarter-over-quarter plunge in Q2 revenue and profit compared to Q1 have created investor apprehension. Laopu Gold's current P/E ratio has dropped to around 10 to 11 times, closer to traditional jewelers like Chow Tai Fook and Luk Fook, reflecting a recalibration of investor expectations.
