Morgan Stanley: Raises target price of CHOW TAI FOOK (01929) to 19.8 Hong Kong dollars, rating "outperform"

Macquarie released a research report stating that based on a forecast price-to-earnings ratio of 15 times for the unchanged 2027 fiscal year, the target price of CHOW TAI FOOK (01929) has been raised by 5.9%, from HK$18.7 to HK$19.8; with a rating of outperforming the market. CHOW TAI FOOK's mainland China self-operated stores and franchise stores' same store sales growth increased from 7.6% and 8.6% in the second fiscal quarter of 2026 to 21.4% and 26.3% in the third fiscal quarter; while same store sales growth in Hong Kong and Macau increased from 6.2% to 14.3%. The company's management expects that due to a higher base period, the upcoming Lunar New Year same store sales will see low to mid single-digit growth; and has raised the full-year revenue and same store sales growth guidance from low single-digit, mid single-digit to low to mid single-digit, mid to high single-digit. Due to favorable product mix, rising gold prices, and operating leverage, Macquarie has raised CHOW TAI FOOK's net profit forecasts for the fiscal years 2026 to 2028 by 3.6%, 6%, 4.5% respectively; revenue forecasts slightly increased by 0.8%, 0.9%, 0.9%; gross margin increased by 1 percentage point, 0.9 percentage point, 0.6 percentage point; and EBIT margin increased by 0.3 percentage point, 0.9 percentage point, 0.6 percentage point.