Citigroup: Raises target price of old shop gold to HK$1162, reiterates "buy" rating.

Citi published a research report stating that Lao Pu Gold released a positive profit announcement, forecasting a 226% to 233% year-on-year increase in net profit for 2025 to 48 billion to 49 billion yuan, higher than the bank's expected 47 billion yuan and the market's expected 45 billion to 48 billion yuan; revenue is expected to increase by 217% to 229% year-on-year, reaching 27 billion to 28 billion yuan, in line with the bank's expectations and higher than the market's expectation of 26 billion to 27 billion yuan. According to calculations, the core net profit margin for 2025 is expected to expand from 17.7% in 2024 to 17.9% to 18.9%, reflecting a strong operating leverage effect that has more than offset the possible contraction of gross profit margins. Citi maintains Lao Pu Gold as its top pick in the Chinese jewelry sector, with a valuation of 13 times the forecasted price-to-earnings ratio for 2026, indicating that the stock remains attractive. Based on higher gross margin forecasts, the bank has raised its net profit forecasts for 2025 to 2027 by 2% to 3%, raising the target price from HK $1119 to HK $1162, and reiterating a "buy" rating.