GF SECURITIES·2024-08-02 01:31Investment Rating - The report maintains a "Buy" rating for the company, with a target price of HKD 10.41 per share based on a 15x PE valuation for FY25 [4][18]. Core Views - The company reported a 20% year-on-year decline in retail value for FY25Q1, with a 18.6% decline in mainland China and a 28.8% decline in Hong Kong and Macau. Same-store sales in mainland China fell by 26.4%, while same-store sales in Hong Kong and Macau dropped by 30.8% [2][3]. - The decline in sales is attributed to high gold prices, which have suppressed consumer demand for discretionary spending. The average selling price of embedded products in mainland China increased by HKD 800 to HKD 8,600, while in Hong Kong and Macau, it decreased by HKD 300 to HKD 16,400 [2][3]. - The company is focused on optimizing its retail network by replacing underperforming stores with high-revenue, high-profit locations to mitigate short-term losses and maintain market share [2][3]. Summary by Sections Financial Forecast - The company is expected to achieve a net profit of HKD 69 billion, HKD 79 billion, and HKD 91 billion for FY25, FY26, and FY27 respectively. The projected revenue for FY25 is HKD 109.37 billion, with a growth rate of 0.6% [3][4]. - The EBITDA for FY25 is forecasted at HKD 12.36 billion, with a net profit margin of 6.4% [3][4]. Retail Performance - The retail value in mainland China saw a decline of 18.6%, while Hong Kong and Macau experienced a 28.8% drop. The same-store sales in mainland China decreased by 26.4%, and in Hong Kong and Macau, it fell by 30.8% [2][3]. - The company continues to enhance its retail network, with a total of 7,429 retail points as of June 30, 2024, having closed 91 stores in mainland China during the quarter [2][3]. Product Segmentation - The sales of gold products in mainland China decreased by 27.9%, while in Hong Kong and Macau, it fell by 33.0%. The average selling price of gold products in mainland China increased by HKD 800 to HKD 6,200, while in Hong Kong and Macau, it rose by HKD 500 to HKD 8,900 [2][3].