The new "queuing king" Laoshop Gold (06181.HK) has made new moves. On May 8, Laopu Gold issued an announcement stating that it plans to allocate new shares, with the net proceeds from the allotment being HK$2.698 billion. Allocation is one of the means for Hong Kong stock companies to achieve refinancing. At this time, Laopu Golden was less than a year away. Since the beginning of this year, Laopu Gold has emerged with its ancient gold skills, and its stores have frequently queued up, becoming a dark horse in the sluggish gold consumer market. However, as traditional giants such as Chow Tai Fook have increased their investment in the ancient gold track, the competitive pressure of this "golden upstart" is also increasing day by day.

"Snap to the End" to lift the ban window financing

Less than a year after its listing, Laopu Gold plans to allocate new shares. On May 8, Laopu Gold issued an announcement stating that it plans to issue 4.31 million new H shares, with the allotment price of HK$630 per share, which is about 8.03% discount from the closing price of HK$685 on May 7. The total proceeds from the Placing are expected to be HK$2.715 billion and the net amount is approximately HK$2.698 billion. The Placing will be completed on the deadline (i.e. May 15, 2025), or at other times or dates agreed by the Company and the Placing Agency.

It should be noted that Laopu Gold was listed on the Hong Kong Stock Exchange on June 28, 2024. At that time, it raised HK$1.042 billion at the IPO issue price of HK$40.5 per share. The amount of financing for this share allotment far exceeded the amount of IPO fundraising.

During this period, Laopu Gold completed two more financings. On July 30, 2024, Laopu Gold announced that it had fully exercised its over-allotment rights. The so-called over-allotment rights mean that underwriters were allowed to allocate a certain number of shares when market demand was strong. At that time, 3.3553 million additional H shares were allocated, at which time, at HK$40.5 per share, and the net proceeds were HK$130 million. On April 3, 2025, Laopu Gold announced that 40.3889 million non-listed shares have been converted into H shares, and these converted H shares will be listed on the Hong Kong Stock Exchange starting from April 7, 2025.

Next, on June 28, a large proportion of the shares of Laopu Gold will be lifted. According to Wind data, on June 28, 69.0507 million shares will be lifted, accounting for 41.01% of the total share capital. Judging from the current stock price, Laopu Gold's stock price hit a high of HK$881 per share on April 2 this year. As of May 9, the company's stock price rose 0.14% to close at HK$699 per share, a decrease of 19.59% from the range on April 2. However, since its listing, Laopu Gold's stock price has increased by more than 1,600% compared with the issue price.

Why did Laopu Gold choose to allocate at this time when the stock price of Laopu Gold is rising and there will be a lifting of the ban on equity? On May 8, our reporter sent an email to the company and called the next day, but no relevant reply was received as of press time. Shen Meng, director of Xiangsong Capital, analyzed to the reporter of the China Times, "It is because when international gold prices continue to rise, Laopu Gold's stock price valuation deviates from the previous normal range, and the cost of issuance financing is low."

Zhan Junhao, a well-known strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, said in an interview with our reporter, "There are many factors that Laopu Gold will allocate new shares after less than one year of listing. First, in order to optimize the capital structure, supplement funds through the issuance of new shares to reduce debt pressure; second, in order to expand strategic reserve funds, and finally, in order to cope with the pressure of unblocking shares, the issuance of shares can dilute the concentration of shares and reduce the impact of major shareholders' share reduction on stock prices."

Regarding the reasons for this placement, Laopu Gold stated in the announcement that after the placement is completed, the proceeds raised will further enhance the group's financial strength, market competitiveness and comprehensive strength, and promote the group's long-term healthy and sustainable development. The other HK$2.698 billion in allotment proceeds are used, of which 80% are used for the development of core business, including but not limited to the expansion of stores in mainland China, the optimization of existing store locations and area expansion, and the rapid growth of same-store sales.

Industry impact is aggravated

Laopu Gold was founded in March 2009 and is the first brand in my country to promote the concept of "Ancient Gold". In the past two years, against the background of the continuous rise in gold prices, many high-net-worth individuals have been enthusiastic about buying gold. With the "double price" pricing method, Laopu's gold performance has achieved rapid development. In 2024, its revenue was 8.506 billion yuan, a year-on-year increase of 167.5%; its net profit was 1.473 billion yuan, a year-on-year increase of 253.9%; its gross profit margin was 41.2%, far exceeding other gold and jewelry brands.

Zhan Junhao pointed out to our reporter that the gold of old shops is sought after because of its high-end brand positioning. The stores are mostly in luxury shopping malls, and are called "Hermes" in the golden world; they are bound to ancient craftsmanship and cultural connotations, which are in line with the trend of the national trend.

However, due to the late establishment, Laopu Gold's current revenue scale is far less than that of Chow Tai Fook, China Gold, Lao Fengxiang, etc. In the first half of the fiscal year of 2025 alone (six months ended September 30, 2024), Chow Tai Fook's turnover reached HK$39.408 billion. In 2024, China Gold and Lao Fengxiang's revenue was 60.464 billion yuan and 56.793 billion yuan respectively.

Laopu Gold focuses on ancient gold, the so-called ancient gold. Zhu Zhigang, vice president and chief gold analyst of Guangdong Gold Association, told our reporter, "Ancient gold has improved the physical characteristics of gold through electroforming technology, and while improving hardness, wear resistance and deformation resistance, it presents a traditional and simple color style. This process innovation has indeed effectively promoted market sales."

But at present, Laopu Gold accounts for not high proportion of ancient gold jewelry brands. Previously, Laopu Gold's prospectus showed that in 2023, the market size of Chinese ancient gold jewelry was about 157.3 billion yuan. Based on revenue, Laopu Gold ranked only 7th in the Chinese ancient gold jewelry market, with a market share of only 2%, while the market share of the top two brands was 19.7% and 11% respectively.

According to the prospectus, the largest ancient gold jewelry brand is a Chinese jewelry brand. It was established in 1929 and has 7,655 offline stores in 2022 and is listed on the Hong Kong Stock Exchange. From these descriptions, it can be inferred that the brand should be Chow Tai Fook; the second largest brand is one of the time-honored brands in China. It was founded in 1848 and has 5,994 offline stores in 2023. It is a listed company on the Shanghai Stock Exchange. From this information, it can be inferred that the brand is Lao Fengxiang.

Laopu Golden Store adopts a direct sales model. As of the end of 2024, it opened a total of 36 self-operated stores; during the same reporting period, Laofengxiang's marketing outlets reached 5,838; as of September 30, 2024, Chow Tai Fook Jewelry's retail outlets reached 6,968 in mainland China.

At present, as many brands increase their layout in the ancient gold track, Laopu Gold, which has no advantage in revenue, is also full of challenges to maintain high growth. Next, Chow Tai Fook launched the inherited series of ancient gold jewelry, and Zhou Shengsheng launched the Oriental Ancient Ancestor Series. Cuihua Jewelry clearly stated at the performance briefing held on May 7 that ancient gold is the company's key development direction.

Against this background, Laopu Gold has accelerated its store layout. According to the prospectus, from the end of 2021 to the end of 2023, the company's number of stores was 22, 27 and 30 respectively, of which 5 and 3 were net new stores in 2022 and 2023 respectively. In 2024, the net new stores were 6, and 4 stores were also optimized and expanded. Regarding the purpose of this financing, Laopu Gold also mentioned it for store expansion.