Citi has cut its price target for LAOPU GOLD (HKEX: 06181) and reduced its earnings forecasts after the company's third-quarter sales recovery fell short of expectations.
The price target was lowered from HK$507 to HK$400. Analysts including Tiffany Feng said in a research note that "continued gold price volatility is suppressing consumers' willingness to spend and lengthening the profit recovery cycle."
Based on the downward revision to revenue expectations, net profit forecasts for 2026, 2027 and 2028 were cut by 7%, 22% and 23%, respectively, to RMB 5.9 billion, RMB 4.0 billion and RMB 4.6 billion on an adjusted basis.
The report noted that although short-term results may fluctuate, recent customer surveys show that consumer behavior has not changed dramatically, providing a clear signal for a eventual recovery.
Citi believes investors may be underestimating LAOPU GOLD's competitive advantages and appear overly concerned about competition issues, and that the current valuation is attractive.