Why has LAOPU GOLD increased by 8 times?

Imagine Mr. Xu Gaoming standing in front of the first store of LAOPU GOLD, with sunlight streaming through the ancient window panes onto the storefront. At that moment, he may not have foreseen that the brand he founded would one day become a top luxury gold brand in the country.

Since its listing on June 28, 2024, in less than 8 months, the stock price of LAOPU GOLD has risen from 64.5 yuan to a peak of 566 yuan, with a maximum increase of up to 7.78 times, leading the Hong Kong stock consumer sector. In comparison, the stock price of Chow Tai Fook (1929.HK), also in the gold category, was 7.87 yuan during the same period, and its highest stock price to date is only 8.65 yuan.

The sluggish performance of Chow Tai Fook's stock price is actually a common phenomenon in the traditional gold and jewelry industry. Stocks of companies like Zhou Dasheng (002867.SZ) and Lao Feng Xiang (600612.SH) in the mainland market have also performed poorly, with only a brief surge at the end of 2024, before falling back to mid-2024 levels in 2025.

Figure 1: Comparison of stock trends of LAOPU GOLD, Chow Tai Fook, Zhou Dasheng, and Lao Feng Xiang (since June 28, 2024)

Source: Wind

In light of this phenomenon, we can't help but ask: Why is LAOPU GOLD able to break through against the trend in a slowing traditional gold and jewelry industry? Is it the rarity of "intangible cultural heritage craftsmanship," or the fervent enthusiasm of capital for "Chinese luxury"?

Gold Craftsman: The Commercial Code of Intangible Cultural Heritage Craftsmanship

Xu Gaoming, who transitioned from a staff member at the Animal Husbandry Bureau in Yueyang to the founder of "Chinese Ancient Method Gold," has experienced a dramatic turnaround.

In 1995, he shifted from politics to business, founding Golden Treasure and embarking on a cross-border journey in gold jewelry and cultural stationery. In 2004, he further focused on the revival of traditional gold craftsmanship by establishing Golden Treasure Jewelry Company.

However, Xu Gaoming's real breakthrough came in 2016 when he decided to separate "LAOPU GOLD" from Golden Treasure, focusing on creating a truly Chinese ancient method gold brand. His goal was no longer just to sell gold jewelry but to combine ancient craftsmanship, cultural heritage, and modern luxury demands to create a unique high-end gold brand.

In 2017, Xu Gaoming's vision gradually took shape—LAOPU GOLD opened its first store in Beijing SKP, positioned as "the Hermes of the gold industry," marking the establishment of its high-end positioning. The store's design inspiration comes from traditional Chinese culture, abandoning the traditional gold sales model and adopting an immersive shopping experience. This seemingly ordinary beginning is destined to become a historic milestone in China's gold and jewelry industry Around the Spring Festival in 2025, the Beijing SKP LAOPU GOLD store experienced unprecedented popularity, with long lines of consumers waiting to purchase LAOPU GOLD products. Shoppers had to wait nearly 6 hours to enter the store, and even as the store opened in the morning, staff had to advise customers at the back of the line to stop queuing.

Figure 2: Long lines at the entrance of Beijing SKP LAOPU GOLD store

Source: Sina Finance

One of LAOPU GOLD's greatest competitive advantages is its deep-rooted intangible cultural heritage craftsmanship. Xu Gaoming firmly chose "ancient method gold" as the core of the brand. So, what exactly is "ancient method gold," and what makes it unique?

According to the standards of the China Gold Association, to be called ancient method gold, at least two of more than ten traditional techniques must be used, including but not limited to: loquat, hollowing, rolling, hammering, filigree, engraving, lost-wax casting, gold-silver inlay, bead explosion, bead absorption, bead blowing, manual gold refining, dotting emerald, and blue burning. The complexity and sophistication of these techniques give each product the attributes of a work of art.

The company insists on handmade production, with a handmade ratio as high as 59%, while ensuring extreme control over product quality through a self-production model. It is these irreplicable techniques that allow LAOPU GOLD to stand out and become a leader in China's high-end gold jewelry market.

In addition to traditional gold jewelry, LAOPU GOLD continuously innovates, pushing the boundaries of ancient method gold.

In 2019, LAOPU GOLD launched its first solid gold diamond-inlaid series, breaking the long-standing tradition in the gold jewelry industry of using K gold for diamond inlays, successfully attracting a wide range of high-end consumers. In 2022, the company introduced the gold body blue burning series, a groundbreaking product that combines ancient techniques with modern design, once again shocking the market and becoming the focus of the industry.

Figure 3: A wide variety of LAOPU GOLD products

Source: LAOPU GOLD official Weibo, prospectus

LAOPU GOLD not only innovates in product craftsmanship but also makes significant efforts in shaping cultural symbols. Traditional Chinese elements such as the Buddhist Vajra and the Palace Museum flower window are cleverly integrated into the designs, endowing each piece with profound cultural connotations and spiritual value. For this reason, LAOPU GOLD has successfully created the unique brand concept of "heirloom collection," winning the affection of high-net-worth clients According to the "2023 Hurun Report on the Brand Preferences of China's High Net Worth Individuals" released by the Hurun Research Institute in March 2023, LAOPU GOLD is listed among the top ten jewelry brands favored by high net worth individuals, alongside many first-tier jewelry brands, being one of only two Chinese jewelry brands.

The company categorizes the income contributions of its members into four groups, with consumers contributing between 300,000 to 1 million and over 1 million from 2021 to 2023 collectively contributing 22.6%, 23.9%, and 26.7% of the company's revenue. The contribution of high net worth individuals to the company's revenue is high and continues to increase.

Figure 4: Number of members and income contributions categorized by revenue contribution

Source: LAOPU GOLD Company Prospectus, Zhejiang Business Securities

Who is betting on "Chinese Luxury"?

The success of LAOPU GOLD is not accidental; it has strong support from capital. As early as 2016, LAOPU GOLD attracted cornerstone investments from Tencent and Southern Fund, laying the foundation for its future explosion. According to Wind data, by the end of 2024, Yinhua Fund increased its holdings by 935,500 shares, with an increase of 639.88%. In addition to Yinhua Fund and Southern Fund, GF Fund and Invesco Fund also began to focus on LAOPU GOLD in the fourth quarter of 2024, purchasing 927,400 shares and 451,100 shares, respectively.

By the end of 2024, among the public fund companies holding LAOPU GOLD, Yinhua Fund ranked first in the number of shares held. One fund manager, Zhang Ping, who was interviewed by me in October 2020, mentioned that the Hong Kong stock market has some consumer assets that are completely absent in the A-share market, and these assets can sometimes be bought at cheaper prices (PS: corresponding to the recently released profit forecast of LAOPU GOLD, its valuation was indeed very low when it was just listed). Regarding stock selection methods, Zhang Ping also mentioned trend investment based on prosperity, which can find companies with synchronized expansion of valuation and profit, achieving relatively good results.

In addition to traditional private and public funds, LAOPU GOLD's investors also include some index funds. In 2024, LAOPU GOLD successfully entered the Hang Seng Consumer Index and MSCI China Index, becoming the focus of international capital markets. This move not only signifies further recognition of the company's brand value but also brings in passive capital inflows.

Figure 5: Top five public fund holdings of LAOPU GOLD (as of the fourth quarter of 2024)

![](https://mmbiz-qpic.wscn.net/sz_mmbiz_png/uCoCfmO6PUuISLGDyXtVELXoqUhdzeqT5ibT4SJmFMtsHS0eEuwo7DL6rUj4c6zx50uI938EQkbN36KoVmqESZw/640? Source: Wind

Compared to other traditional gold jewelry brands, the capital market has a stronger faith in investing in LAOPU GOLD—not only because of its intangible cultural heritage craftsmanship and the potential of the high-end market but also due to the unique charm of the integration of Chinese traditional culture and the luxury goods market. Investors believe that the rarity of intangible cultural heritage craftsmanship and the penetration of high-net-worth clientele hold great potential, and LAOPU GOLD has the capability to challenge the market share of international luxury brands.

In the long term, LAOPU GOLD is benchmarked against international luxury brands such as Cartier and Bulgari. The unique cultural background and exquisite craftsmanship of LAOPU GOLD give it unparalleled competitiveness in the Chinese market. With the upgrading of domestic consumption and the rise of the "national trend," LAOPU GOLD is expected to experience explosive growth in the coming years.

Controversy and Concerns: Is it Gold or a Bubble?

LAOPU GOLD's market value has significantly surged in just a few years, but its high valuation has raised widespread attention in the market. The current price-to-earnings ratio has far exceeded the industry average, reaching 104.40 times (as of February 21 data). In comparison, peers such as Chow Tai Fook, Lao Feng Xiang, and Chow Sang Sang have price-to-earnings ratios of 17.75, 13.34, and 12.89 times, respectively. Such a disparity reflects the market's premium expectations for its "intangible cultural heritage craftsmanship" and "Chinese luxury" brand.

Regarding the peak valuation of LAOPU GOLD, there is a viewpoint in the market that suggests mapping the value of overseas luxury brands. Assuming LAOPU GOLD has an x% probability of becoming the "Chinese version of Cartier," its market value should be x% of Cartier's market value. This valuation logic is controversial, as we cannot precisely know how large this probability is.

However, one thing is clear: LAOPU GOLD has opened up a new realm for domestic gold luxury brands and has carved out its unique path. Perhaps it may not become the "Chinese version of Cartier," but it has undoubtedly become a symbol of cultural confidence and a cultural icon for China, showcasing the potential of Chinese brands to emerge in the global luxury goods sector.

Kaiyuan Securities believes that LAOPU GOLD has room for continued profit growth in the future. LAOPU GOLD follows a strategy of raising prices twice a year. Through price adjustments, the company can maintain a gross profit margin of around 40%, highlighting its consumer product attributes rather than the intrinsic value of gold itself, as well as the company's high-end brand positioning and consumers' high recognition of its products, along with strong market demand.

The first price adjustment for LAOPU GOLD in 2025 has already begun, with several offline store social media accounts announcing that product price adjustments will take place on February 25.

Figure 6: The first price adjustment for LAOPU GOLD in 2025 has already begun

Source: LAOPU GOLD offline store information

Of course, if LAOPU GOLD wants to achieve an expansion of influence in the future, it still faces several challenges. Firstly, in the domestic market, although LAOPU GOLD has established a strong brand influence in the core business districts of first-tier cities, the speed of opening new stores is relatively slow due to high market saturation. In 2024, the number of new stores for LAOPU GOLD is only 7, which is below market expectations. Especially in fiercely competitive areas for gold and jewelry, such as high-end shopping centers, the expansion speed of LAOPU GOLD seems to have slowed down.

The challenge of going overseas is also one of the difficulties the company faces. Although LAOPU GOLD has opened stores in places like Hong Kong and Singapore, the performance in these overseas markets has not met expectations. During the process of going overseas, how to effectively localize the brand and export culture remains a significant challenge for LAOPU GOLD.

The future of the brand is a reflection of the values and vision of its managers

In the short term, LAOPU GOLD has successfully attracted significant capital attention and market enthusiasm with its unique intangible cultural heritage craftsmanship and brand positioning. In 2024, with the continued advancement of same-store growth and overseas expansion, the company is expected to maintain steady profit growth and further enhance its valuation. However, the high expectations of the market also mean an accumulation of risks, especially in the face of intensified industry competition and valuation adjustments.

In the long term, the future of LAOPU GOLD will depend on whether it can successfully transform the "Chinese symbol" into a representation of global luxury goods. This is not only about expanding market share but also about the global dissemination and recognition of brand culture.

In the global luxury goods market, the core value of a brand often comes not only from the product itself but also from the cultural connotations and stories behind it. As a modern inheritor of traditional Chinese craftsmanship, LAOPU GOLD's luxury positioning represents not only material high-end but also a spiritual elevation.

As consumers continue to elevate their understanding of "luxury goods," they no longer merely pursue the external symbols of brands but begin to focus on the unique cultural values and stories contained within the brands. LAOPU GOLD, in this cultural context, has gradually established its important position in the luxury goods field in China and even globally through precise market positioning and innovative brand strategies.

Gold never sleeps, but whether it can continue to shine in this brilliant field still requires the test of time and the precise execution of brand strategy.

High-quality Chinese assets are the core of market returns

In the context of the constantly changing global economic environment, investors' attention to the Chinese market is becoming increasingly profound. In the future, as the world's second-largest economy, China will remain an important battleground for global capital. Whether in the gold industry, luxury goods market, or other sectors such as technology and consumption, there is immense potential and opportunity. Especially during the process of China's economic transformation and upgrading, high-quality underlying assets are gradually emerging, and the depth and breadth of the capital market are continuously expanding.

In this process, we not only see brands like LAOPU GOLD achieving leapfrog development through cultural confidence and innovation, but we can also see more enterprises with long-term value standing out with their unique competitiveness and innovation LAOPU GOLD has created nearly a 10-fold return for investors in less than a year, and this is in a Hong Kong stock market dominated by institutional investors. High-quality Chinese assets remain the main source of investment returns. We believe that the next ten-bagger stock market is still ongoing. Instead of focusing on grand narratives, it is better to look down and find outstanding companies in various industries.

The macro is something we must accept, while the micro is where we can make significant progress.

Author of this article: Zhu Ang, Source: DianShu Investment, Original title: "Why has LAOPU GOLD risen 8 times?"

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