CHOW TAI FOOK(HK:01929) Soochow Securities·2024-10-23 08:14Investment Rating - The report maintains a "Buy" rating for the company, indicating a potential upside in the stock price despite current pressures on performance [2]. Core Views - The company's retail sales in mainland China declined by 19.4% year-on-year in FY2025Q2, primarily due to rising gold prices leading to consumer hesitation [1]. - The gross margin improved significantly due to the increase in the proportion of higher-margin products, despite a decline in sales of gold jewelry and embedded products [2]. - The company closed 145 stores in FY2025Q2, with ongoing adjustments in its retail channels [2]. - Adjusted net profit for FY2025H1 is expected to decline by 12%-16%, with retail sales down by 18%-22% [2]. - The forecast for net profit has been revised downwards for FY2025-FY2026 due to the impact of high gold prices on consumer demand, with expected profits of 46.1 billion, 67.5 billion, and 78.3 billion HKD for FY2025, FY2026, and FY2027 respectively [2]. Financial Summary - Total revenue for FY2023A was 94.684 billion HKD, with a projected decline to 95.940 billion HKD in FY2025E [1]. - The net profit attributable to the parent company for FY2023A was 5.384 billion HKD, expected to drop to 4.608 billion HKD in FY2025E [1]. - The latest diluted EPS is projected to be 0.46 HKD for FY2025E, with a P/E ratio of 15.78 [1][9]. - The company’s gross margin is expected to improve to 21.73% in FY2025E, up from 20.50% in FY2024A [9]. - The asset-liability ratio is projected to decrease from 69.89% in FY2024A to 66.68% in FY2025E [9].