Just a year ago, Laopu Gold (6181.HK) was hailed by the market as the “Herm\u00e8s of gold.” Today, that luxury narrative is facing a brutal stress test. Since hitting an all-time high of HK$1,108 per share in July 2025, the company\u2014renowned for its ancient gold craftsmanship\u2014has been in steady decline. As of July 10, 2026, its shares closed at HK$391.2, slashing its market capitalization from a peak of nearly HK$190 billion (approximately $24.2 billion) to just HK$69.1 billion (approximately $8.8 billion). More than HK$110 billion (approximately $14.0 billion) in value has evaporated in a single year, a staggering 60% drop.<\/p>\n
Compared to its peers, Laopu Gold’s drawdown is particularly glaring. Over the same period, traditional jewelry retailers like Chow Tai Fook (1929.HK) and Lao Feng Xiang (600612.SS) saw their share prices retreat by roughly 30% to 40%. This sharp divergence in the capital market reflects a fundamental repricing of Laopu Gold’s business model. The core question investors are now asking: Is this a luxury company deserving of a premium valuation, or merely a gold retailer tethered to bullion price fluctuations?<\/p>\n
The Construction and Collapse of a Luxury Narrative<\/p>\n
Laopu Gold’s rise was built on a meticulously crafted luxury storytelling framework. Unlike traditional jewelers that price products based on “gold spot price plus labor fees,” Laopu Gold adopted a “fixed-price” strategy, leveraging ancient craftsmanship innovation and manufactured scarcity. The goal was to decouple product pricing from international gold prices and capture brand premium instead. To simulate the value-retention attributes of luxury goods, Laopu Gold implemented six rounds of price hikes starting in 2024, with cumulative increases reaching 118%.<\/p>\n
This playbook proved remarkably effective during a one-way gold rally. From 2024 to early 2025, London spot gold surged from $2,000 per ounce to an all-time high of $5,598 per ounce. The soaring bullion prices not only fueled consumer “buy-on-the-rise” enthusiasm but also turned Laopu Gold’s high inventory into a profit accelerator. For the full year 2025, Laopu Gold reported revenue of 27.3 billion yuan (approximately $4.0 billion), up 221% year-on-year, and net profit of 4.87 billion yuan (approximately $718.7 million), up 230%. At high-end malls like Beijing SKP, customers faced queues exceeding six hours just to enter the store.<\/p>\n
However, as the gold price tide receded, the true nature of Laopu Gold’s luxury credentials was laid bare. After January 2026, gold prices reversed sharply, falling below $4,000 per ounce by June. The market quickly recognized that Laopu Gold’s performance was deeply intertwined with gold prices. According to a report by Dudong Finance, before the gold rally, Laopu Gold’s inventory turnover days stretched to an entire year\u2014far longer than Chow Tai Fook’s. After gold prices spiked, turnover days plummeted to 150 days in the first half of 2025, while revenue expanded nearly ninefold in two years. This demonstrates that its sales explosion relied heavily on gold’s investment attributes rather than pure brand loyalty.<\/p>\n
A Fatal Decision: Reverse Stockpiling and Rejecting Hedges<\/p>\n
If falling gold prices were an external shock, founder Xu Gaoming’s aggressive strategy amplified the internal vulnerabilities. During the gold price surge, Laopu Gold made a bold decision: to aggressively stockpile inventory in reverse and explicitly reject hedging.<\/p>\n
Xu Gaoming publicly stated that hedging through financial instruments would constrain the brand’s long-term development and betray the original aspiration of building a world-class ancient gold brand. In a bull market, this stance appeared confident and visionary. But when gold prices turned south, it became a heavy shackle. Financial data shows that by the end of 2025, Laopu Gold’s inventory had ballooned to 16.04 billion yuan (approximately $2.4 billion), a 292.5% year-on-year increase. In stark contrast, while the company booked 4.87 billion yuan in net profit, its operating cash flow showed a net outflow of 6.85 billion yuan (approximately $1.0 billion). This means all the profits earned were converted into gold sitting in warehouses. With gold prices dipping below $4,000, this massive inventory faces daily depreciation pressure.<\/p>\n
Meanwhile, Laopu Gold’s pricing has entered an awkward phase in the downturn cycle. In February 2026, the company completed another round of 20% to 30% price increases. Taking a small climbing vine gourd pendant as an example, its price on the Tmall flagship store translates to 1,958.86 yuan per gram, while Chow Tai Fook and Lao Feng Xiang were quoting around 1,206 to 1,208 yuan per gram during the same period. According to Citi’s calculations, Laopu Gold’s premium over traditional gold jewelers has exceeded 55%, far higher than the roughly 30% level before 2024. With consumers adopting a “buy on the rise, not on the dip” mentality, the excessive premium has driven away price-sensitive customers. SPDB International, citing forecasts from SKP mall experts, indicated that Laopu Gold’s same-store sales at SKP in April could drop 40% to 60% year-on-year.<\/p>\n
Valuation Logic Shift and Benchmarking Dilemma<\/p>\n
The capital market’s attitude toward Laopu Gold has undergone a roller-coaster transformation. During the gold upcycle, the market treated it as a luxury company, with its trailing price-to-earnings ratio once exceeding 100 times\u2014far surpassing the 20-30 times levels of international luxury titans like Herm\u00e8s and Richemont. But as cracks appeared in the luxury narrative, its valuation logic swiftly reverted to that of a gold retailer. By June 2026, Laopu Gold’s P\/E ratio had fallen to around 12 times, on par with traditional jewelers like Chow Tai Fook.<\/p>\n
The collapse of this valuation framework stems from Laopu Gold’s failure to build genuine luxury moats. True luxury brands sell “pricing power detached from raw material costs,” with value derived from irreplicable soft assets like historical heritage and royal lineage. For instance, raw material costs for Van Cleef & Arpels’ classic bracelets typically account for only 10% to 30% of the retail price. In contrast, Laopu Gold’s core selling point\u2014”ancient handcrafted techniques”\u2014is not exclusive technology. Chow Tai Fook’s “Heritage Collection,” Chao Hong Ji’s intangible cultural heritage filigree craft, and similar products from Luk Fook Jewellery and Lao Miao Gold all compete fiercely in the market, replicating its business strategy down to the pixel level.<\/p>\n
Furthermore, shortcomings in product quality and second-hand value retention have significantly undermined its high-end positioning. Complaints about loose diamonds, discoloration, and purity disputes frequently appear on social media platforms. More critically, according to an investigation by Beijing Business Today, Laopu Gold products can only be resold on the secondary market at slightly above the international gold price, with consumers typically absorbing a discount of around 50%. This stands in sharp contrast to luxury goods like Herm\u00e8s bags or Rolex watches, which possess high residual value or even appreciation potential.<\/p>\n
Despite facing mounting skepticism, Laopu Gold still holds certain differentiated advantages over traditional jewelers. Its customer overlap with the world’s top five luxury brands exceeds 82%, and it boasts 610,000 high-net-worth members. In 2025, Laopu Gold generated 55% of Chow Tai Fook’s profit with only 31% of its revenue, demonstrating a superior profit structure under the fixed-price model.<\/p>\n
But the tests ahead remain severe. As Dudong Finance analyzed, if gold prices continue to decline and trigger a significant earnings correction, Laopu Gold’s luxury narrative will struggle to form a closed loop. In an industry lacking core competitive barriers, whether Laopu Gold can defend its differentiation amid competitive encirclement and gold price volatility will determine its ultimate valuation anchor. For now, it may be difficult to become a true “Herm\u00e8s of gold,” but it will likely still command a valuation premium over ordinary gold retailers.<\/p>\n","protected":false},"excerpt":{"rendered":"Just a year ago, Laopu Gold (6181.HK) was hailed by the market as the “Herm\u00e8s of gold.” Today,…\n","protected":false},"author":2,"featured_media":50222,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12919],"tags":[32912,32910,15680,4953,32913,32908,32914,32911,32915,32909],"class_list":["post-50221","post","type-post","status-publish","format-standard","has-post-thumbnail","category-hermes","tag-ancient-gold-craftsmanship","tag-chow-tai-fook","tag-citi","tag-hermes","tag-hong-kong-stock-exchange","tag-laopu-gold","tag-london-spot-gold","tag-pop-mart","tag-skp","tag-xu-gaoming"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/posts\/50221","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/comments?post=50221"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/posts\/50221\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/media\/50222"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/media?parent=50221"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/categories?post=50221"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/france\/wp-json\/wp\/v2\/tags?post=50221"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}