Macquarie has issued a research report maintaining an "underperform" rating on LAOPU GOLD (06181), slashing its target price by 39% to HK$275. The brokerage noted that the company's second-quarter results significantly missed expectations.

In the first half, revenue grew 60%-66% year-on-year, falling 17%-19% below Macquarie's forecast. Non-IFRS adjusted net profit rose 83%-85% year-on-year, coming in 27% lower than projections. Based on calculations, Q2 revenue is estimated at approximately 2.3 billion to 3.95 billion yuan, with net profit of only 510 million to 760 million yuan. In comparison, Q1 revenue stood at 16.5 billion to 17.5 billion yuan, and net profit reached 3.6 billion to 3.8 billion yuan.

Where to begin

Macquarie believes that due to a high base, unstable gold prices, intensifying competition, and speculative inventory liquidation, same-store sales growth in the second half may still face downside risks. The firm expects further downward pressure on gross margins, as low-cost gold raw materials may have been fully utilized, and promotional activities in the gold jewelry market could become more aggressive amid weak demand.

Rationale for limiting to just 10 ASX 200 shares

The company's strategy of focusing on new product launches and high-value customer management is likely to increase operating expenses, thereby weighing on operating profit. Macquarie has cut its net profit forecasts for 2026 to 2028 by 39% to 41%, reflecting the weaker-than-expected first-half performance and more conservative assumptions on same-store sales and margins.