China's 'Hermes of gold' Lao Pu Stock Lags Despite Soaring Gold Prices and Record Earnings
Lao Pu Gold delivered record-breaking interim results for 2025, yet its stellar performance has failed to halt a significant slide in its stock price. The divergence highlights investor unease over the high-end jeweler’s soaring valuation, a massive upcoming share unlocking, and broader macroeconomic headwinds, raising questions about the sustainability of its growth narrative.
On August 20, the company announced that its revenue for the first half of 2025 surged 251% year-on-year to RMB 12.35 billion yuan (about US$1.7 billion), while its adjusted net profit soared 290.6% to RMB 2.35 billion. Sales performance (including tax) was equally robust, climbing 249.4% to RMB 14.18 billion amid a period of otherwise soft gold jewelry consumption in China.
Despite the blowout earnings, Lao Pu Gold's shares have been in a steady retreat. After an initial 8.84% jump on the day of the announcement, the stock fell in subsequent trading sessions. The shares have shed 17.45% over the past two months after hitting an all-time high of HK$ 1,108 on July 8, erasing over HK$ 50 billion in market capitalization. The stock closed most recently at HK$783 per share.
The trend of strong performance failing to support a high valuation is not unique to Lao Pu Gold. Mixue Group, another popular Hong Kong-listed consumer stock, has also seen its share price fall over 25% in the last two months despite reporting double-digit growth, signaling broader investor caution toward the "new consumption" sector.
A Luxury Strategy in a Crowded Market
Lao Pu Gold’s impressive rise since its June 2024 initial public offering, where its stock surged more than 20-fold from its HK$40.5 issue price, is rooted in a deliberate luxury positioning. The brand pioneered the "ancient-method gold" concept in China, differentiating itself with a "fixed-price" model rather than the industry standard of charging by gold weight plus a labor fee. This strategy shifts consumer focus from the raw material cost to the product’s design and cultural value.
This focus is reflected in its product mix, with high-margin, gem- and enamel-inlaid gold products accounting for 56% of revenue in 2023. Further reinforcing its upscale image, Lao Pu Gold exclusively opens stores in top-tier luxury shopping malls like SKP and MixC World. It has a presence in nine of China's top ten high-end shopping centers. Unlike competitors such as Chow Tai Fook Jewellery Group that pursue rapid expansion, Lao Pu maintains scarcity with a cautious approach, adding only five new stores in the first half of 2025 for a total of 41.
Despite its small footprint, the brand boasts extraordinary efficiency. In H1 2025, its average sales per mall location reached approximately RMB 459 million. According to Frost & Sullivan, Lao Pu Gold ranks first in mainland China for both average single-store revenue and sales per square meter among all jewelry brands. This exclusivity has cultivated a loyal customer base whose demographics overlap significantly—an average of 77.3%—with patrons of top global luxury brands like Louis Vuitton, Hermès, and Cartier. In the first half of 2025, its loyalty members grew by 130,000 to 480,000, contributing 68% of revenue with a repeat purchase rate of 60%.
Unlocking Shares and Profit-Taking Fears
The recent pressure on Lao Pu Gold's stock can be partly attributed to a significant lock-up expiration. On June 28, approximately 69.05 million restricted shares, representing 41.01% of the company's total issued share capital, became eligible for trading. The newly freed shares are held by early-stage institutional investors, founders, and employee stock ownership platforms, fueling market anxiety about a potential wave of selling.
However, some analysts believe this is not the sole cause. "If investors have a strong enough conviction in a company's future growth, a share unlocking event is not enough to dampen their enthusiasm," said Shen Meng, a director at Chanson & Co. He argues that while Lao Pu Gold, alongside peers like Pop Mart International Group, initially surged by catering to consumer demand for "emotional value," this sentiment alone is insufficient for long-term, stable growth.
Compounding the pressure is the stock's meteoric rise itself. With a year-to-date gain of over 200% in 2025, making it one of the top performers in Hong Kong's consumer discretionary sector, a significant portion of the recent sell-off can be attributed to profit-taking by early investors. This rotation out of high-flying stocks has created a negative feedback loop with the selling pressure from the share unlocking.
Valuation in the Spotlight
Even with the recent correction, Lao Pu Gold’s valuation remains a central debate for investors. The strong earnings report helped digest its valuation, bringing its trailing twelve-month price-to-earnings (PE-TTM) ratio down from a lofty 80x to below 40x. However, this level still represents a substantial premium over traditional jewelry retailers. The key question is whether investors will continue to classify Lao Pu Gold as a trendy "new consumption" brand deserving a higher multiple.
Macroeconomic factors are also at play. The current environment of a slow and uncertain economic recovery is generally unfavorable for cyclical, non-essential consumer stocks. This has likely triggered a sector-wide rotation, contributing to Lao Pu Gold's short-term adjustment. Analysts suggest the stock’s recent decline is a confluence of these factors, representing a transactional choice by funds seeking to secure profits and reduce risk.
Looking ahead, the company's growth hinges on several factors. While it aims to weaken the link between gold prices and its product value, the commodity’s price trajectory remains a key driver of consumer perception. Furthermore, with its high-end domestic retail strategy approaching saturation, international expansion—particularly into culturally similar markets in East and Southeast Asia—is seen as critical to unlocking future growth. For now, the recent valuation pullback may offer a healthier entry point for investors who believe in the company’s long-term potential as a homegrown luxury powerhouse.