Laopu Gold: Unlocking Value Amid Record Gold Prices and Strategic Shifts

The upcoming lock-up expiration for Laopu Gold Co., Ltd. on June 27, 2025, marks a pivotal moment for investors. With 121.4 million shares set to flood the market—more than doubling the current free float—the event could test investor sentiment. Yet, against a backdrop of soaring gold prices, central bank demand, and potential structural changes like a stock split, Laopu's stock presents a compelling case for strategic optimism. Let's dissect the catalysts and risks to determine whether this is a buying opportunity or a looming liquidity trap.

Gold's Rally: A Tailwind for Laopu's Prospects

First and foremost, Laopu's fortunes are inextricably tied to gold prices. As of June 2025, gold has surged to record highs, reaching $3,498 per ounce by April—a 47.37% year-over-year jump. This momentum is fueled by geopolitical tensions, including Middle Eastern conflicts and U.S.-China trade wars, which have driven investors toward gold as a safe haven. Central banks, too, are playing a pivotal role: Poland added 49 tonnes in Q1 2025, while China's reported purchases (13 tonnes) likely understate actual demand. Combined, central banks bought a record 244 tonnes in Q1, signaling a global shift toward de-dollarization.

Analysts at Goldman Sachs and JP Morgan now project prices as high as $4,000 by mid-2026, with even conservative forecasts exceeding $3,000. For Laopu, this bullish trajectory is a tailwind: higher gold prices directly boost mining margins, assuming costs remain stable. However, the company's valuation—currently trading at 32x forward earnings—will need to be justified by production growth or further price appreciation.

The Lock-Up Looming: Catalyst or Concern?

The June 27 lock-up expiration will release a significant portion of Laopu's shares, potentially pressuring prices. The December 2024 lock-up, which freed 10.8 million shares, triggered a 9.4% single-day drop. This time, the volume is far larger, raising questions about whether institutions can absorb the supply.

Yet, two factors mitigate downside risks:
1. Shareholder Commitment: Lock-up agreements stipulate that controlling shareholders and cornerstone investors cannot dispose of shares for six months post-listing. While the June expiry lifts this restriction for some holders, others remain bound by follow-on terms. This limits the immediate selling pressure.
2. Demand Dynamics: With gold prices near historic highs, institutional buyers may view the lock-up as an opportunity to accumulate shares at a potential dip.

The Stock Split: A Game-Changer for Liquidity?

Laopu's stock price—surging past HK$1,000—has created a high barrier for retail investors, requiring HK$100,000 to buy 100 shares. This exclusionary pricing could be remedied by a stock split, akin to moves by Tencent (2014) and Zai Lab (2022). A split would lower the per-share price, broadening retail participation and boosting liquidity.

While Laopu has yet to announce a split, the pressure to do so is mounting. Hong Kong's exchange is even exploring reforms to make high-priced stocks more accessible. A split could catalyze a surge in retail buying, mirroring Tencent's post-split trajectory.

Valuation and Volatility: Navigating the Risks

Laopu's premium valuation (32x forward P/E vs. peers like Chow Tai Fook at 16x) is a double-edged sword. Bulls argue that Laopu's growth trajectory—driven by gold's secular bull market and new mine projects—warrants a higher multiple. Bears counter that the premium is unsustainable without significant production increases.

Volatility remains a near-term risk. The stock's recent 9.4% drop after hitting HK$1,015 highlights market sensitivity to macro and technical factors. However, if gold prices hold above $3,000, institutional demand may stabilize the stock.

Investment Strategy: Timing the Catalysts

For investors, the optimal approach hinges on timing and catalysts:
1. Post-Lock-Up Buying: If the stock dips on June 27 due to selling pressure, consider accumulating positions, especially if gold prices remain robust.
2. Wait for the Split: A stock split could unlock retail participation, creating a self-reinforcing liquidity cycle. Monitor Laopu's communications for any split announcements.
3. Focus on Fundamentals: Track production growth, cost management, and central bank gold purchases. If Laopu's output expands while costs stay contained, the premium valuation may prove justified.

Conclusion: A High-Reward, High-Risk Opportunity

Laopu Gold's upcoming lock-up expiration presents both risks and rewards. While the share flood could test prices, the underlying gold bull market and potential structural changes like a stock split create a compelling narrative for upside. For investors with a long-term horizon and tolerance for volatility, the June 27 event may mark a strategic entry point—if gold's ascent continues and Laopu executes on its growth plans.

Final Advice:
- Bullish Scenario: Buy on dips below HK$900 post-lock-up, targeting HK$1,200 if gold hits $4,000.
- Caution: Avoid chasing rallies above HK$1,000 without confirmation of a stock split or production upgrades.

In the gold rush of 2025, Laopu's stock may yet be the pick of the bunch—if investors navigate the lock-up storm wisely.