Laopu Gold’s ‘Triple-Digit’ Explosion: Citi Hikes Targets as 5-Hour Queues Signal a Gold Rush
While broader consumer sentiment in China remains a subject of intense debate among macro strategists, a very specific, high-end corner of the retail market is witnessing a veritable stampede. In a research note published on January 26, 2026, Citi Research has doubled down on its bullish stance for Laopu Gold, citing on-the-ground observations that defy the gravity of a sluggish retail environment.
The report, led by analyst Tiffany Feng, highlights a phenomenon that blends luxury consumption with the age-old desire for wealth preservation: a massive surge in physical store traffic driven, counter-intuitively, by record-high gold prices. For investors tracking the divergence between China’s mass market and its ultra-high-end discretionary spend, this report offers a critical data point.
The SKP Frenzy: 5-Hour Wait Times
The most striking takeaway from Citi’s latest channel check is the sheer velocity of foot traffic at China’s premier luxury hubs. Following the start of the Chinese New Year (CNY) promotion on January 24, 2026, Citi analysts observed "huge traffic" at Laopu Gold’s locations in SKP malls—the bellwether for luxury consumption in Beijing and Xi’an.
According to the note, the demand is overwhelming operational capacity.
"With >5 hours’ long queues per social media posts, we think the per sqm traffic is similar to the high level during last CNY. Given Laopu’s Beijing SKP store and Xi’an SKP store have enlarged foot areas by about 50% last Sep, together with about 50% higher product price, we think Laopu’s SKP store sales were likely doubled over the weekend."
This suggests that the company is not merely seeing a return of footfall, but a compounding effect of expanded floor space and significant pricing power. Citi projects that the "triple-digit revenue growth" witnessed during the New Year Holiday promotion is set to sustain right into the Lunar New Year period.
The Price Paradox: Why Expensive Gold is Selling Faster
Conventional economic theory suggests that as the price of a commodity rises, demand should soften. However, in the current Chinese market, the opposite is occurring. The relentless rally in spot gold prices has triggered a psychological shift among consumers, viewing "Heritage Gold" not just as adornment, but as a rapidly appreciating asset class.
Citi points out a fascinating pricing dynamic: as raw gold prices surge, the gap between mass-market pricing and Laopu’s premium fixed pricing is narrowing.
"We believe the strong demand was triggered by the recent gold price rally, which makes Laopu’s product price (per gram implied) close to mass-market peers’ weight-based gold product price."
Essentially, as the "floor" price of gold rises, Laopu’s premium products appear increasingly competitive relative to standard weight-based jewelry, fueling a flight to quality.
Margin Compression and imminent Price Hikes
Despite the top-line explosion, the cost of goods sold (COGS) presents a temporary headwind. The velocity of sales means that Laopu has churned through its lower-cost inventory from October 2025. The gold currently being sold was purchased during the price spikes of November 2025 and onwards.
Citi estimates the raw material math as follows:
"Given the fast increase of gold price, we estimate Laopu’s average purchasing cost to be RMB 1,060 yuan (US147) per gramin cluding new VAT policy impact. Laopu’s fixed product price implies RMB1,740(US241) per gram after discount of 5-10%."
Consequently, the bank expects Gross Profit Margin (GPM) for the CNY sales period to compress to 36%, down from 40% in December. However, this margin pressure is viewed as transient. The analysts explicitly expect Laopu Gold to "raise price after CNY to ease the temporary margin pressure," a move that demonstrates strong pricing power in a market where few retailers dare to pass on costs.
The Bull Case: Earnings Upgrades
In response to the weekend’s blowout traffic, Citi has revised its forward-looking estimates upward. The bank has raised its 2026E and 2027E net profit forecasts by 5%, driven by a higher Same Store Sales Growth (SSSG) assumption of 15%.
The bank now forecasts aggressive growth for the fiscal year 2026:
"We now expect 2026E revenue and NP [Net Profit] to grow 45% and 57% respectively."
Citi has reiterated a Buy rating with a raised target price of HK$1,119.00, implying a potential upside of over 40% from the January 23 closing price. For investors, the signal is clear: in a market starved for growth, the Chinese consumer is still willing to spend aggressively—provided the asset glitters.