Citi drops target price on Laopu Gold to HK$400 as consumer spending faces pressure
It still has a 19% upside, with strong brand loyalty and high repurchase intent highlighted as positives
Citi has reduced its target price for Laopu Gold to HK$400, down from HK$507, while maintaining a "buy" rating for the stock. This adjustment was made due to changing consumer sentiment and a lower product price, as well as the recent dip in spot gold prices in late September to US$4,110. Analysts believe consumer spending on gold may be delayed if prices continue to fall, particularly with discounts offered on the product.
Despite a slightly improved forecast for Laopu Gold sales in Q3, net profit is expected to decline by 12% to 589 million yuan. Citi analysts note that the new pricing strategy could be a "double-edged sword," as it may attract a broader customer base while also potentially impacting gross profit margins.
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