Morgan Stanley: Maintains "Overweight" Rating for LAOPU GOLD (06181), Target Price Reduced to HKD 505
The bank estimates that Lao Pu's gold revenue in the second quarter will decline by over 30% year-on-year.
Morgan Stanley released a report stating that it has lowered the target price for LAOPU GOLD (06181) from HKD 590 to HKD 505, maintaining an Overweight rating. The main reason for the adjustment is based on the weaker-than-expected performance in the second quarter of 2026, as well as a declining gold price environment, which has impacted the company's revenue and profit forecasts. Morgan Stanley has reduced its projected revenue and profit for LAOPU GOLD in 2026 by 14%, and in 2027-28 by 11-12%, to reflect the weaker-than-expected performance in the second quarter of 2026 under a lower gold price environment.
Morgan Stanley pointed out that the demand trend in the second quarter shows a strong correlation with gold prices. Gold prices have fallen by about 13%, which corresponds to LAOPU GOLDs value, given the companys proactive stance on product pricing. The firm estimates that LAOPU GOLD's revenue in the second quarter could decline by over 30% year-on-year. However, with gold prices stabilizing in the third quarter, there has been some seasonal improvement. CHOW TAI FOOK (01929) reported positive year-on-year growth in sales of its priced merchandise in July. As for LAOPU GOLD, the firm observed that selected products are queued off the shelves in early August. LAOPU GOLDs valuation remains attractive, with a projected price-to-earnings ratio of 7.7 times for 2026, implying an actual return of about 10% for 2026 as well.
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