GF Securities: First deposit of gold from an old store (06181) with a “buy” rating of a reasonable value of HK$775.64

The Zhitong Finance App learned that Guangfa Securities released a research report stating that the net profit of Laoshuang Gold (06181) is estimated to be 48.0/68.9/8.71 billion yuan in 25-27, respectively. Considering the company's differentiated layout of the high-end gold track, it can be expected to be optimized for expanding stores at home and abroad. Referring to comparable companies, the company was given 18 times PE in 26 years, corresponding to a reasonable value of HK$775.64 per share, and for the first time, coverage was given a “buy” rating. (Reference exchange rate 1 HKD = 0.91 RMB)

The main views of GF Securities are as follows:

The gold and jewelry industry ushered in industrial changes, and ancient gold became an important carrier for high-end

Thanks to process iterations and a boost in gold prices, jewellery consumption is becoming high-end and lightweight. Ancient gold is significantly superior to traditional gold in terms of process complexity and design expression, promoting the expansion of gold jewelry consumption to higher prices. As a leading brand of ancient French handmade gold, the company is expected to continue to benefit.

Differentiation enters the high-end gold gap circuit, and the three elements of brand/product/channel build core competitiveness

① Product side: The company uses a full price pricing customer unit price and gross margin that are significantly higher than peers and continues to launch a differentiated design with leading market aesthetics; ② Channel side: Under the full direct management model, the company creates an immersive shopping experience. Most of the store locations are concentrated in the core business districts of first-tier and new first-tier cities, leading domestic and foreign jewelry brands with the same store efficiency growth rate, average store efficiency and floor efficiency; ③ Brand side: Focus on cultural narrative+membership service, and the company continues to win the favor of high-net-worth people.

Tuodian+ stores have a new two-wheel drive, and the company's growth flexibility is remarkable

① Store renewal continues to advance: As of 25H1, the company has completed the renewal and upgrading of many core stores in China, and better business district locations and larger business space continue to improve single store performance; ② Store expansion space at home and abroad can be expected: Benchmarking the channel layout of Bulgari/Cartier/Tiffany/Van Cleef & Arpels in Greater China and Singapore, the bank believes that medium- to long-term companies still have room to expand at least 40 stores in Asia.

Risk warning: industry competition risk, channel expansion and optimization risk, gold price fluctuation risk.