Ge Long Hui·2025-11-26 02:57Core Viewpoint - Bank of America Securities reports that Chow Tai Fook's net profit for the first half of the fiscal year ending September 2026 is HKD 2.5 billion, remaining stable year-on-year and in line with expectations [1] Financial Performance - Revenue for the period is HKD 39 billion, a year-on-year decline of 1%, which is 3% lower than the bank's expectations [1] - Gross margin stands at 30.5%, below the expected 31.3%, but partially offset by a reduction in the selling, general and administrative (SG&A) ratio to 14%, which is lower than the anticipated 15.3% [1] Management Guidance - Management has raised the gross margin guidance for the full fiscal year ending March 2026 to between 31% and 32%, citing rising gold prices and an increase in the proportion of sales from priced products [1] Profit Forecast Adjustments - Following the sales trends from October to mid-November and the better-than-expected profit margin guidance, the bank has raised its net profit forecasts for Chow Tai Fook for fiscal years 2026 and 2027 by 6% and 1%, respectively, to HKD 8.7 billion and HKD 8.8 billion [1] Target Price and Rating - The target price has been slightly increased from HKD 17.5 to HKD 17.6, with a reiterated "Buy" rating, based on the continuous improvement in same-store sales growth which may support a valuation re-rating [1] Sales Growth Outlook - The bank notes that management's guidance on same-store sales growth is somewhat conservative, indicating potential upside; it believes that the worst period of decline in same-store sales growth has passed, and initiatives to drive business transformation may support profit recovery [1]