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Investing.com - BofA Securities upgraded Laopu Gold (6181:HK) from Neutral to Buy and raised its price target to HK$999.00 from HK$932.00, representing a 7% increase.
The upgrade comes as Laopu Gold has underperformed both "new consumption" peers and gold jeweler competitors Chow Tai Fook and Luk Fook during the current quarter. While the broader peer group averaged 10% gains, and CTF/LF saw increases of 43% and 26% respectively, Laopu shares have declined 5% quarter-to-date.
BofA Securities attributes Laopu’s recent underperformance to investor concerns regarding lock-up expiry, slower growth in gold prices, and potentially low earnings visibility. Despite these concerns, the firm believes multiple fundamental catalysts ahead could drive a reversal of this underperformance.
The financial institution has raised its 2025 and 2026 net income forecasts for Laopu by 21% and 15% respectively, projecting RMB 4.5 billion for 2025 and RMB 6.2 billion for 2026. These improved earnings expectations contributed to the higher price target.
BofA Securities lowered its target multiple to 35x 2025 P/E from the previous 40x, noting this valuation is largely in line with "new consumption" peers in the sector.
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