Our target price of HK$1,119 is based on 36x 2025E P/E, which corresponds to 0.33x PEG. Given its rapid growth outlook benefiting from strong product competitiveness and gold price hike, we believe Laopu warrants a valuation premium over global luxury peers.

Key downside risks that could impede the shares from reaching our target price include: 1) gold price volatility; 2) intense competition; 3) evolving consumer tastes and preferences; 4) consumption trade-down amid China’s soft economy; and 5) negative free cash flow amid expansion.