Little Moo: Maintain Confidence in Old Shop's Gold Growth Visibility, Reiterate "Buy" Rating with Target Price of HK$1249

Morgan Stanley's research report states that Old Shop Gold (06181) has strong performance in its new boutique store during the opening promotion period, with an ideal customer group, strong foot traffic, and sales revenue. Therefore, Little Moo expects this momentum to continue until the second half of 2025, driven by Old Shop's brand value, product innovation, and market demand for "national brands". Little Moo also maintains confidence in Old Shop's gold growth visibility under uncertainty, based on the discounted cash flow (DCF) method, setting a target price of HK$1249 as of December 2025, corresponding to predicted earnings per share ratios of 41 times and 30 times for this year and next. Reiterate "Buy" rating, with catalysts including new store openings and potential inclusion in the MSCI China Index.

Old Shop Gold announced its profit report yesterday (27th), with its revenue growing 241% to HK$120 billion to HK$125 billion in the first half of 2025, and net profit growing 279% to HK$22.3 billion to HK$22.8 billion (in line with market expectations of HK$21 billion to HK$23 billion). The strong growth is attributed to brand value enhancement and customer base expansion; continued optimization, promotion, iteration, and innovation in products. Moreover, the stable performance of new boutiques in the first half year (including 5 new boutiques and 1 renovated boutique) has yet to be reflected in the earnings, which will present its contribution in the second half.

Little Moo expects Old Shop's momentum to continue until the end of 2025, with revenue growth expected to reach 178% due to strong same-store sales growth and stable store expansion; net profit is expected to grow 211%, and estimated earnings per share for 2025-2027 will be raised by 2% to 10%, driven by new boutiques' strong performance in the second half, while Old Shop is expected to achieve average annual compound growth rate (CAGR) of 69% for sales revenue and 77% for net profit from 2025 to 2027.