Damo: Target price reduced to HK$505 for old gold (06181) “gain” rating

The Zhitong Finance App learned that Damo released a research report stating that the target price of the old store gold (06181) was lowered from HK$590 to HK$505, giving it an “gain” rating. The main reason for the adjustment was the increase in the company's revenue and profit forecast due to weaker results for the second quarter of 2026 and the decline in the gold price environment. Damo cut the predicted revenue and profit of the old store Gold by 14% and the predicted revenue and profit for 2027-28 by 11-12% to reflect weaker than expected results for the second quarter of 2026 in a lower gold price environment.

Damo pointed out that demand trends in the second quarter showed a strong correlation with gold prices. The price of gold fell by about 13%, which corresponds to the value of old gold stores because the company took the initiative to bear the price of the product. The bank estimates that the revenue of long-established gold stores fell by more than 30% year-on-year in the second quarter. However, as gold prices stabilized in the third quarter, there were quarterly improvements in the previous period. Chow Tai Fook (01929) indicated that sales of its priced products increased year-on-year in July sales. In the case of old gold stores, the bank observed queues outside selected shelves in early August. Old-fashioned gold valuations are still attractive. According to the 2026 forecast price-earnings ratio of 7.7 times, the implication is that 2026 is actually about 10%.