CHOW SANG SANG(HK:00116) Zhi Tong Cai Jing·2025-09-01 07:27Core Viewpoint - Chow Sang Sang (00116) reported a mixed performance in its interim results, with a revenue decline but a significant increase in net profit, leading to a positive market reaction reflected in its stock price increase [1] Financial Performance - The company’s revenue for the first half of the year decreased by 2% year-on-year to HKD 11 billion [1] - The net profit attributable to shareholders increased by 71% year-on-year to HKD 900 million [1] - The interim dividend declared is HKD 0.21 per share, with a payout ratio of 16%, compared to HKD 0.15 per share in the same period last year [1] Market and Operational Insights - According to CICC, the company’s performance exceeded expectations, primarily due to strong gross margin performance and effective cost control [1] - Same-store sales in mainland China and Hong Kong-Macau markets showed continued improvement compared to Q2 2025 [1] - Management plans to optimize its mainland channels and expects to reduce the number of stores by 10% by the end of 2025 compared to the beginning of the year [1] Earnings Forecast and Valuation - CICC raised its earnings per share (EPS) forecasts for 2025 and 2026 by 50% and 34% respectively, to HKD 1.94 and HKD 2.01 [1] - The current stock price corresponds to a price-to-earnings (P/E) ratio of 7/7 times for 2025/26 [1] - Due to industry valuation improvements, the target price has been raised from HKD 8.36 to HKD 15.16 [1]