Xu Gaoming, an ex-fisheries clerk in China who started jewelry brand Laopu Gold in 2016, has amassed a $9 billion fortune after company shares soared almost 1,500% following an initial public offering less than a year ago. But analysts caution that the stock might have hit unsustainably high levels.
Xu, 60, is chairman of the Hong Kong-listed firm and derives his net worth from a company stake, according to Forbes estimates. The Beijing-based jeweler now has a market capitalization of HK$113 billion ($14.5 billion), above Hong Kong-listed rival Chow Tai Fook’s HK$91.3 billion, although it generates a fraction of the latter’s sales and only has 33 stores in mainland China compared to Chow Tai Fook’s nearly 7,000.
The surging share price has made one company investor, 60-year-old Chen Guodong, a billionaire with a $1.2 billion net worth, according to Forbes estimates.
Investors are bullish on Laopu because they see it as a unique luxury brand with high growth potential. Laopu touts its elaborate craftsmanship and product designs inspired by Buddhism. The company’s stores, with showrooms that look like imperial Chinese courts, are located in luxury malls next to other top-tier stores such as Cartier and Louis Vuitton.
All of that has helped strike an “emotional cord” with wealthy Chinese who have longed for a domestic luxury brand, says Mark Tanner, Shanghai-based founder of research firm China Skinny.
Laopu’s tapping into China’s cultural heritage through its designs and marketing appealed to Lu Yao, a 26-year-old student living in Wuxi, a city less than an hour’s train ride away from Shanghai.
Lu tells Forbes by WeChat that her family recently spent 13,000 yuan ($1,800) to buy a Laopu gold ring as a wedding gift for a friend. She says they didn’t mind paying much more for the company’s products, which carry fixed prices as opposed to competitors such as Chow Tai Fook, which sell gold jewelry based on the weight of the underlying precious metal.
One Laopu necklace, for example, has a price tag of about 26,000 yuan ($3,600), almost 50% more expensive than the 23.6 grams of gold used to make it. Lu says Laopu is one of the few gold jewelry brand that has designs she wants.
“I first saw a Laopu store in 2018, and I was curious as to why a local gold jewelry brand opened a shop next to Cartier,” she says. “After I walked in, I was indeed impressed by the designs.”
Laopu predicts that its net profit soared as much as 260% to 1.5 billion yuan in 2024, according to a February stock exchange filing alerting investors to the results. The company didn’t respond to an emailed request for comment.
Laopu has yet to publish more financials for all of last year. According to Laurel Gu, a Shanghai-based research director at Mintel China, the company generated an average of 300 million yuan in sales from each store in China in 2024. That’s a level that surpasses international luxury jeweler’s performance in the world’s second-largest economy, she says by WeChat.
Gu says the company’s momentum will continue into this year, as consumers keep lining up outside Laopu stores to buy a limited number of products. On Chinese social media sites, there are often images of long lines outside its retail shops, with some internet users saying it could take hours to browse the products during peak seasons such as the Chinese New Year.
Yet despite the momentum, there are concerns that Laopu’s stock might be overpriced. Laopu shares currently trade at 34 times its forecast earnings for 2025, compared with an average of 11 times for domestic jewelry brands, according to a March 6 research note by Morgan Stanley.
The company may expand its number of stores to 60 by 2029, according to Morgan Stanley, which has a price target of HK$555 per share for Laopu. As of 2 p.m. today, the company’s share price was HK$652 apiece.
Laopu’s attractiveness might be hurt if gold prices fall. That might cause rich Chinese to stop collecting its pieces as a form of investment, Kenny Ng, a Hong Kong-based securities strategist at Everbright Securities International, says by WeChat.
“Laopu is definitely not cheap among consumption-related stocks, as it enjoys a premium over peers, ” says Ng. “At such price levels, I think investors should consider risk control.”
