Guosen: Maintains CHOW TAI FOOK (01929) "outperform" rating, sales growth further accelerates.

Guosen released a research report stating that they maintain a "outperform the market" rating for CHOW TAI FOOK (01929). Considering the further increase in the proportion of high-margin priced jewelry products, the bank has raised the company's net profit for the fiscal years 2026-2028 to HK$8.637 billion/HK$9.646 billion/HK$10.559 billion (previous values were HK$7.785 billion/HK$8.711 billion/HK$9.543 billion), corresponding to P/E ratios of 15.7/14/12.8 times. Guosen's main points are as follows: Recent Events The company released unaudited key operating data for October-December 2025, with overall retail value increasing by 17.8% year-on-year, accelerating by 13.7 percentage points from the 4.1% growth in the previous quarter. Retail value in mainland China increased by 16.9%, while retail value in Hong Kong, Macau, and other markets increased by 22.9%. Retail Viewpoints 1) In terms of same-store sales, same-store sales of directly-operated stores in mainland China increased by 21.4%, accelerating by 13.8 percentage points from the previous quarter; same-store sales of franchise stores increased by 26.3%, accelerating by 17.7 percentage points. Same-store sales in Hong Kong, Macau increased by 14.3%, accelerating by 8.1 percentage points from the previous quarter. 2) In terms of product structure, high-margin priced jewelry continued to lead growth. Retail value of priced jewelry in mainland China increased by 59.6% year-on-year, contributing 40.1% to total retail value, an increase of 10.7 percentage points. 3) In terms of stores, the company continued to implement the plan to enhance the efficiency of individual stores, closing 228 stores during the quarter with a total of 5813 stores at the end of the period. However, it is expected that the rate of store closures will narrow in fiscal year 2027, and expansion in overseas markets will bring incremental contributions. Product Innovation, Channel Optimization to Capture Growth Dividends Against the backdrop of continuously rising gold prices, the company has captured the growth dividend of priced gold jewelry through product innovation, channel optimization, becoming the core driver of same-store growth. In addition, products priced by weight have also performed well, benefiting from the release of pent-up demand and the peak season towards the end of the year. In the future, the company will continue to invest in research and design, strengthen the layout of high-margin priced products; optimize store structure at the channel end and use new image stores to boost sales of individual stores, achieving sustained performance growth. Risk Warning Consumption recovery is slower than expected, store expansion is slower than expected, franchisee management is poor, significant fluctuations in gold prices, and new product promotion falls short of expectations.