Laopu Gold Co.’s extraordinary stock surge is facing a test of durability.
After soaring more than 2,300% since its June 2024 debut, the jewellery maker’s shares crossed the HK$1,000 mark — a rare feat that has now introduced a different kind of challenge: access.
Despite the surge making Laopu the most expensive stock on the Hong Kong exchange — eclipsing Mixue Group’s HK$580 — the milestone comes with a high barrier to entry.
Laopu requires a minimum purchase of 100 shares, equating to HK$100,000 ($12,750), a sum that may price out everyday investors.
Though odd-lot trading is technically possible through brokerages, such trades often involve longer execution times and higher fees, further limiting participation from smaller investors.
Stock shows signs of strain amid valuation concerns
On Thursday, the stock briefly touched HK$1,015 before falling as much as 9.4%.
The volatility suggests investors may be reassessing the stock’s valuation.
Laopu currently trades at 32 times forward earnings, compared with Chow Tai Fook’s 16 — raising questions about the sustainability of its price.
“Laopu is excessively expensive in my view, based on cash flow, even though growth looks promising,” said Yu Dingheng, fund manager at Shenzhen Flying Tiger Investment & Management Co. in a Bloomberg report.
HK$1,000 is going to be a tough hurdle.
Source: Bloomberg
Lockup expiry could trigger market pressure
Adding to the pressure is an upcoming lockup expiry on June 27, which will release 121.4 million shares — more than double the current free float — into the market.
A smaller expiry of 10.8 million shares in December led to Laopu’s worst weekly performance since listing, signaling the risk that the larger release may rattle investors.
Analysts warn that such an influx could test whether institutional interest is strong enough to absorb the added supply without dragging down prices.
Calls grow for greater accessibility
Hong Kong’s exchange has reportedly been exploring changes to make expensive stocks more accessible.
Currently, firms set their own board lot sizes, and while this gives flexibility, it can also freeze out retail interest when share prices surge.
Laopu has not yet indicated whether it will consider a stock split — a step taken by Tencent in 2014 and Zai Lab in 2022 — that would reduce the per-share price and improve liquidity.
IPO enthusiasm meets post-rally caution
Laopu’s blockbuster IPO was nearly 600 times oversubscribed in the retail segment, prompting the company to expand its retail allocation sixfold to 11.2 million shares.
But with a steep valuation, limited retail access, and a wave of new shares poised to enter the market, the company’s gravity-defying run may soon meet more grounded investor sentiment.
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