Despite sluggish demand in the retail jewellery market, Beijing-based Laopu Gold has emerged as a standout success.
With revenue skyrocketing 148% year-on-year in the first half of 2024 and stock prices surging 437% since its June Hong Kong listing, the jeweller has become the best performer on the Hang Seng Composite Index this year.
Since its market debut, the 14-day relative strength index (RSI) of Laopu Gold’s stock has surpassed 80 on at least five occasions—a notable achievement often signalling a strong outperformer.
While an RSI above 70 typically suggests the stock may be overbought, analysts remain optimistic.
All 14 analysts covering the company have issued buy recommendations, according to Bloomberg data.
The Hermès of gold: what’s behind Laopu’s irresistible allure?
Laopu Gold has maintained an impressive gross margin above 40% over the past three years, far surpassing the industry average of 8% to 20%.
Founded 15 years ago, the jewellery maker distinguishes itself by focusing on heritage gold jewellery inspired by Buddhism, priced as high-end luxury items rather than by weight.
This strategy has elevated the brand, drawing comparisons to global icons like Cartier and Tiffany.
Offering fixed prices for its jewellery, it has distanced itself from fluctuations in gold prices that typically influence consumer behaviour in China.
The brand also distinguishes itself with unique practices: it avoids franchising, operates only directly managed stores, and exclusively uses “old craft” pure gold, with no low-carat options.
This approach has earned Laopu the moniker “Hermès of gold,” cementing its place as a luxury leader in China’s jewellery market.
Laopu’s “relatively small size” is also an advantage that allows it to focus on quality over quantity, said Mark Tanner, managing director of consultancy China Skinny in Shanghai, as reported by Bloomberg.
The brand “fills a space” in the untapped China-made luxury market, he said.
With just 33 stores, the brand’s exclusive presence enhances its appeal among China’s high-net-worth clientele.
A 7.2-gram Laopu necklace can retail for 11,230 yuan (US$1,540)—a premium far above its weight-based value—further solidifying its luxury standing.
For wealthy patrons seeking bespoke pieces that incorporate classic Chinese motifs, prices can reach hundreds of thousands of yuan.
Laopu Gold stock bucks broader market trends
While many Chinese retailers await government stimulus to boost consumption, Laopu Gold has already carved a thriving niche.
Its focus on wealthy repeat customers has paid dividends, with loyalty members making purchases five times or more doubling since 2021.
JPMorgan Chase analysts forecast Laopu’s revenue to grow by 55% annually between 2024 and 2026.
The company plans to expand its footprint with 10 new stores in mainland China and five across Hong Kong, Macau, Singapore, and other Asian cities within three years.
The jeweller also capitalizes on digital sales via Alibaba’s Tmall, JD.com, and WeChat, enhancing its reach beyond brick-and-mortar locations.
Despite its successes, Laopu Gold faces potential hurdles. Maintaining its aura of exclusivity while scaling operations will be critical, Tanner said.
Additionally, fluctuating gold prices and intensifying competition from established brands like Chow Tai Fook and Cartier may test its resilience.
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