China’s Laopu Gold surges 15% as investors devour newly available shares

A surge in the supply of Laopu Gold shares after the end of a lock-up period turned out to be a buying opportunity for investors who missed out on the luxury jeweller’s 14-fold surge since its 2024 debut.

The Beijing-based company’s shares jumped 15 per cent to a record of HK$1,008 on Monday, bucking concerns of a pullback after 69 million shares – a 40 per cent stake – became free-floating, allowing pre-listing investors including founder Xu Gaoming to sell without restrictions a year after the stock’s debut. The stock was little changed at HK$1,006 on Wednesday as trading resumed after a public holiday.

Laopu’s resilience underscores investors’ persistent shift to a group of so-called new consumer names that are underpinned by the rise of Generation Z – those born between roughly 1997 and 2012. The firm’s faster pace of store openings at home and abroad this year has reinforced belief in sustainable earnings growth based on robust demand for its products.

“Laopu’s branding and strong pricing power will drive fast growth in sales and help to cut costs such as rentals,” said Fan Junhao, an analyst at Huatai Securities in Hong Kong. “Its foray into the overseas market will also give more growth room for its already strong sales.”

Laopu has surged more than 1,300 per cent since its debut on June 28, 2024, and is capitalised at HK$173.7 billion (US$22.1 billion). That translates to 38.5 times projected earnings for this year, compared with 17.2 times for Chow Tai Fook Jewellery Group, according to Bloomberg data. Laopu is expected to report 175 per cent profit growth this year.

Same-store growth at Laopu’s four flagship shops jumped by 170 per cent year on year in the first five months, and online sales at Alibaba’s Tmall and JD.com’s platform surged 333 per cent in the period, according to the brokerage, citing industry data.