LUK FOOK HOLDINGS(590.HK)：MORE CONSTRUCTIVE DEVELOPMENTS TO AID 2HFY26

Core Viewpoint - LF's 1HFY26 net profit increased by 43% year-on-year to HK$619 million, exceeding expectations due to strong performance and favorable industry sales [1][2] Financial Performance - LF's 1HFY26 revenue grew by 26% year-on-year to HK$6,843 million, benefiting from a lower base last year and improved consumer demand [2] - The net profit of HK$619 million reflects limited hedging losses of HK$384 million and a gross profit margin (GPM) increase of 2 percentage points year-on-year to 34.7% [2] - Strong cost control contributed to the impressive earnings, which surprised the market despite prior positive profit warnings [2] Product and Organizational Strategy - LF's product strategy, particularly the successful launch of the DiaBing series, significantly boosted earnings [2] - The change in wholesaling policy, requiring franchisees to purchase products from LF's headquarters, resulted in a 100% year-on-year increase in wholesale revenue to HK$2,451 million [2] Future Outlook - Management expects GPM in 2HFY26 to remain strong or even higher than in 1HFY26, supported by a pricing strategy following the new VAT policy [3] - The VAT policy is anticipated to widen the price gap between mainland China and Hong Kong/Macau, encouraging more consumer travel to these regions, where LF generates a significant portion of its revenue (56% in 1HFY26) [3]