HTSC·2024-07-24 13:02Investment Rating - The report maintains a rating of "Buy" for Chow Tai Fook (1929 HK) with a target price of HKD 10.80, corresponding to an 18x PE ratio [2][7]. Core Views - Chow Tai Fook's retail sales decreased by 20.0% year-on-year in FY25Q1, primarily due to short-term fluctuations in gold prices affecting consumer demand. However, with gold prices stabilizing and consumer sentiment improving, retail sales growth is expected to recover [2][3]. - The company is actively optimizing its channel and product structure, focusing on enhancing the sales of gold products, particularly those sold by weight, which saw a sales increase of over 100% year-on-year in Q1 [2][3]. - The competitive landscape in the jewelry industry is intensifying, prompting Chow Tai Fook to slightly optimize its channels to better adapt to future developments [4]. Summary by Sections Sales Performance - Chow Tai Fook's retail sales in mainland China and Hong Kong/Macau declined by 18.6% and 30.8% year-on-year, respectively. Same-store sales growth (SSSG) for mainland China was -26.4% and for Hong Kong/Macau was -30.8% [3]. - The sales of higher-margin gold products in mainland China increased significantly, with their proportion of total sales rising by 10.1 percentage points to 15.8% [3]. Channel Optimization - In FY25Q1, Chow Tai Fook closed 185 stores and opened 89, resulting in a net closure of 95 stores. The total number of stores reached 7,504 in mainland China and 375 in Hong Kong/Macau [4]. - The company is focusing on improving single-store sales and profitability amid a challenging retail environment [4]. Financial Projections - The forecasted net profit attributable to shareholders for FY25 is HKD 5.986 billion, with expected growth in subsequent years [6]. - Chow Tai Fook's dividend yield for FY25 is projected to be 6.4%, indicating a favorable cost-benefit ratio for investors [5].