Zhao Yin Guo Ji·2024-07-29 07:01Investment Rating - The report assigns a BUY rating to Chow Tai Fook (CTF) with a target price (TP) of HK$ 14.54, representing a P/E ratio of 20x for FY25E, which aligns with the long-term average of comparable peers [2][4]. Core Insights - Chow Tai Fook reported a 20% year-over-year decline in total retail sales value (RSV) for 1QFY25, attributed to weak consumer spending and gold price volatility [2]. - The company anticipates flat revenue growth for FY25E, with forecasts of -2%, 5%, and 4% revenue growth for FY25, FY26, and FY27 respectively, while net profit is expected to grow by 12%, 9%, and 8% in the same periods [2][6]. - The contribution of fixed-price products increased significantly, rising from 5.7% to 15.8% in 1QFY25, which is expected to enhance gross profit margins [2][6]. - Chow Tai Fook is optimizing its channel strategy, closing a net of 95 stores while enhancing its online presence, which now accounts for 13.8% of sales in Mainland China [2][6]. Financial Summary - For FY25E, revenue is projected at HK$ 106,501 million, with a slight decline of 2% year-over-year, while net profit is expected to reach HK$ 7,260.5 million, reflecting a growth of 12% [3][11]. - The gross profit margin is forecasted to be 21.6% for FY25E, with net profit margin at 6.8% [6][12]. - The company maintains a strong financial position with net cash status and a return on equity (ROE) projected to increase to 27.5% in FY25E [3][12].