Shen Wan Hongyuan: Maintaining the “Buy” Rating Target Price of HK$639.25 for Old Stores Gold (06181)

The Zhitong Finance App learned that Shen Wan Hongyuan released a research report stating that the purchase rating will be maintained. In the short term, the recovery in gold prices is expected to drive an increase in demand for jewellery. At the same time, the company is expanding its products and categories, and market feedback is good; in the long run, the company's high-end gold luxury products are clearly positioned, and brand potential, member assets and internationalization space still support long-term growth. The bank maintained the company's adjusted net profit forecast of 64.99/74.52/8.458 billion yuan for 26-28, respectively. Based on the uniqueness of the company's brand value, with reference to PE, a comparable gold and jewellery retailer, the bank gave old gold a 13-fold adjusted PE in 2027, with a target price of HK$639.25, maintaining a “buy” rating.

Shen Wan Hongyuan's main views are as follows:

The company released 26H1 results and is within the performance forecast range

According to the company announcement, 26H1 achieved sales performance of 22.779 billion yuan, +60.6% year on year, revenue of 19.808 billion yuan, +60.3% year on year, net profit of 4.267 billion yuan, +88.2% year over year, adjusted net profit (not considering the impact of share-based payment compensation) of 4.317 billion yuan, +83.6% year over year. According to the median estimate of the 26Q1 performance forecast, 26Q2 achieved revenue of 2.81 billion yuan, sales performance (tax included revenue) of 3.28 billion yuan, and adjusted net profit of 620 million yuan. The Q2 results were pressured in the short term due to anticipated demand in Q1 and expectations of falling gold prices.

Online channels have increased significantly, overseas business is expanding rapidly, and single-store output remains the world leader

According to the company's announcement, 26H1 store channel revenue was 15.409 billion yuan, +43.5% year-on-year, accounting for 77.8%; online platform revenue was 4.40 billion yuan, +171.9% year-on-year, accounting for an increase of 22.2%, mainly benefiting from large online promotions at the beginning of the year. By region, mainland China's revenue was 16.491 billion yuan, +53.3% year-on-year, accounting for 83.3%; overseas revenue was 3.317 billion yuan, +107.8% year-on-year, accounting for an increase of 16.7%, which is in line with the company's “brand internationalization and market globalization” strategy. By product, revenue from pure gold products was 19.795 billion yuan, +60.3% year on year, while revenue from other products and services was 13 million yuan, +56.3% year over year. 26H1's single shopping mall achieved an average sales performance of over 500 million yuan, and mainland China continues to rank first in terms of store efficiency and floor space efficiency among global luxury goods groups.

Gross margin and net margin increased significantly, and profit quality continued to verify brand premiums

According to the company announcement, 26H1's gross profit margin was 41.3%, +3.2pcts year-on-year, mainly due to sufficient relatively low cost inventory reserves at the end of 25 and product price adjustments at the end of February '26. On the expense side, the cost rate for the period was 13.13%, -0.98pct, and the cost management for the period was well controlled; among them, the sales/management/finance expense ratios were 11.08%/1.54%/0.51%, respectively, and -0.77/-0.37/+0.16pct, respectively. The financial expense ratio increased slightly due to increased interest on loans. 26H1's net profit margin was 21.54%, +3.19pcts; the adjusted net interest rate was 21.79%, +2.76pcts year over year. The profit quality continued to verify the brand premium, and the pricing rights under the high-end positioning were further realized.

The channel has entered a new stage of positioning and upgrading, and brand potential, customer service and product innovation continue to deepen

On the channel side, according to the company's announcement, by the end of 26H1, the company had opened a total of 45 self-operated stores in 35 leading commercial centers in 16 cities; in 2026, the company plans to optimize 10-12 stores, and 6 have been completed as of the announcement date. On the member side, as of the end of 26H1, the company had about 730,000 loyal members, an increase of 120,000 over the end of 2025, an increase of nearly 20%, and the member repurchase rate continued to increase. On the product side, by the end of 26H1, the company had created more than 2,600 works. World-class works such as gold nut lacquerware and gold enamel with a dragon pattern were released, and gold ware sales increased by a three-digit percentage during the reporting period.

The interim dividend was greatly increased, and the shareholders' intention to return it was clear

According to the company's announcement, the board of directors proposed an interim dividend of RMB 18.02 per share (25H1 is 9.59 yuan per share). The total amount of dividends to be paid is based on 50% of the cumulative undistributed profit as of June 30, 2026. It is subject to approval by the Extraordinary Shareholders' Meeting on November 25, 2026. The dividend plan shows confidence.

Risk warning: Uncertain gold prices, increased market competition, same-store sales growth and store expansion fall short of expectations.