Laopu Gold (6181.HK) Earnings Cut on Weaker-than-Expected Sales Recovery in 3Q26

Citi expects qoq better sales but weaker net profit in 3Q26E for Laopu Gold. Gold price fluctuation continues to pressure consumer spending sentiment, prolonging the expected earnings recovery. Citi expects 3Q26 revenue of Rmb3.6bn (+9% qoq) and net profit of Rmb589m (-12% qoq) with GPM down ~5ppts qoq to 41-42% and NPM down ~4ppts qoq to 16%. Operating leverage improvement is unlikely to offset GPM contraction post price reduction. Laopu's new pricing strategy could be a double-edged sword: attractive discounts may expand the customer base, but consumers may wait for better price offerings if gold price trends down. Underlying drivers for recovery remain (strong brand loyalty and high repurchase intent), but timing is affected by gold price. Citi lowers 2026E/27E/28E net profit forecasts by 7%/22%/23% to Rmb5.9bn/4.0bn/4.6bn, and cuts TP to HK$400.0 from HK$507.0 based on unchanged 15x 2027E P/E. Maintain Buy. Key downside risks: gold price volatility, intense competition, evolving co