Zhi Tong Cai Jing·2026-01-22 01:52Core Viewpoint - CICC has raised the EPS forecast for Chow Tai Fook (01929) for FY26/27 by 3% to HKD 0.90/0.96, maintaining an outperform rating with a target price increase of 6% to HKD 17.85, indicating a 30% upside potential based on a 20x FY26 P/E ratio [1] Company Status - The company reported a retail value growth of 18% year-on-year for 3QFY26 (October-December 2025), with same-store sales growth of 21% and 26% for direct and wholesale in mainland China, and 14% in the Hong Kong and Macau markets [2] Retail Performance Exceeds Expectations - The overall retail value increased by 18% year-on-year in 3QFY26, surpassing management expectations. In mainland China, retail value grew by 17%, with same-store sales increasing by 21% and 26% for direct and wholesale respectively. Excluding watch business, same-store sales for direct increased by 26%. October saw the best performance due to price increase expectations and strong demand, while November and December experienced high single-digit same-store growth despite the impact of gold value-added tax policy adjustments. The company optimized channels, closing 230 Chow Tai Fook brand stores during the quarter, with an average monthly store efficiency of RMB 1.4 million, significantly higher than closed stores [3][4] Outstanding Performance of Mainland Pricing Jewelry - The retail value and same-store sales of mainland pricing jewelry increased by 60% and 53% respectively in 3QFY26, with sales proportion rising by 11 percentage points to 40%. Retail value and same-store sales of priced gold jewelry decreased by 0.6% and increased by 13% respectively. In the Hong Kong and Macau markets, retail value and same-store sales of priced gold jewelry increased by 47% and 43%, while pricing jewelry saw declines of 7% and 15% [4] Positive Outlook and Upgraded Annual Guidance - Despite high base effects in 4QFY26, the company is actively promoting Spring Festival marketing activities and launching a new product line for the New Year. Management expects same-store sales to achieve low single-digit year-on-year growth during the Spring Festival. Due to strong sales performance and gold price conditions, the company has upgraded its FY26 full-year guidance, projecting revenue growth in the low single digits, gross margin improvement to 31.5%-32.5%, and operating profit margin nearing 20%. Additionally, the company anticipates that gold loan losses will be similar to FY25 [5]