Zhi Tong Cai Jing·2025-10-22 06:22Core Viewpoint - UBS has raised the target price for Chow Tai Fook (01929) from HKD 16 to HKD 18.35, implying a price-to-earnings ratio of 24 times for the fiscal year 2026 and 18 times for 2027, maintaining a "Buy" rating [1] Group 1: Financial Performance - Chow Tai Fook's sales for the second fiscal quarter of 2026 (July to September) increased by 4.1% year-on-year, with domestic and international growth rates of 3% and 11.4% respectively, aligning with UBS's expectations [1] - Same-store sales growth rates in mainland China retail stores, franchised stores, and other markets were 7.6%, 8.6%, and 6.2% respectively [1] Group 2: Management Insights - Management indicated that sales growth during the Golden Week holiday slightly outperformed industry data, and there has been an observed improvement in consumer sentiment [1] - Due to the upward trend in gold prices, the gross margin and operating profit margin for the first half of the year exceeded previous expectations, although this benefit was offset by increased losses from gold loans [1] Group 3: Earnings Forecast Adjustments - UBS has raised Chow Tai Fook's earnings before interest and taxes per share forecast for fiscal year 2026 by 8%, considering improved gross margins driven by product pricing and a lower share count [1] - Earnings per share forecasts for fiscal years 2027 and 2028 have been increased by 1% to 2% [1]