Editor’s Note
In a challenging retail environment, Laopu Gold’s exceptional performance—marked by surging revenue and a skyrocketing stock price—offers a compelling case study on resilience and market strategy. This article examines the factors behind its standout success.
Despite weak demand in the retail jewelry market, Beijing-based Laopu Gold has emerged as a remarkable success story. With revenue up 148% year-on-year in the first half of 2024 and its stock price surging 437% since its June listing on the Hong Kong Stock Exchange, the jeweler has become the best performer on the Hang Seng Composite Index this year.
Since its market debut, Laopu Gold’s 14-day Relative Strength Index (RSI) has exceeded 80 at least five times, a notable achievement that often signals strong outperformance. Although an RSI above 70 typically suggests a stock is overvalued, analysts remain optimistic. According to Bloomberg data, all 14 analysts covering the company have issued buy recommendations.
Laopu Gold has maintained an impressive gross margin above 40% over the past three years, far exceeding the industry average of 8% to 20%. Founded 15 years ago, the jeweler distinguishes itself by focusing on Buddhist-inspired gold jewelry, sold at luxury prices rather than by weight. This strategy has elevated the brand, drawing comparisons to global icons like Cartier and Tiffany. By offering fixed prices for its jewelry, it has distanced itself from gold price fluctuations that typically influence consumer behavior in China.
The brand also stands out through unique practices: it avoids franchising, operates only directly managed stores, and exclusively uses pure “old craft” gold, with no low-carat options. This approach has earned Laopu the nickname “Hermès of Gold,” solidifying its position as a luxury leader in the Chinese jewelry market.
With only 33 stores, the brand’s exclusive presence enhances its appeal to China’s high-spending clientele. A 7.2-gram Laopu necklace can retail for 11,230 yuan (US$1,540), a premium well above its weight-based value, further cementing its luxury status. For wealthy patrons seeking custom pieces incorporating classic Chinese motifs, prices can reach hundreds of thousands of yuan.
While many Chinese retailers await government stimulus measures to boost consumption, Laopu Gold has already carved out a premium niche. Its focus on wealthy, loyal customers has paid off, with loyal members making five or more repeat purchases since 2021. JPMorgan Chase analysts forecast Laopu’s revenue will grow 55% annually between 2024 and 2026.
The company plans to expand its presence with 10 new stores in mainland China and five in Hong Kong, Macao, Singapore, and other Asian cities within three years. The jeweler is also capitalizing on digital sales via Alibaba’s Tmall, JD.com, and WeChat, strengthening its reach beyond physical outlets.
Despite its successes, Laopu Gold faces potential obstacles.
Furthermore, fluctuations in gold prices and increased competition from established brands like Chow Tai Fook and Cartier could test its resilience.