China Post Securities·2025-06-22 13:33Investment Rating - The report initiates coverage with a "Buy" rating for the company [2] Core Views - The company reported a revenue of HKD 896.56 billion for the fiscal year 2025, a year-on-year decrease of 17.5%, while the net profit attributable to shareholders was HKD 59.16 billion, down 8.98%. Excluding the impact of gold lending, the operating profit was HKD 147.46 billion, an increase of 9.8% year-on-year [5][6] - The company is expected to benefit from the recovery in the gold jewelry industry starting from Q2 2025, with a strong growth outlook in the medium to long term due to the trend of self-consumption and the increasing demand for jewelry [11] Summary by Sections Company Overview - Latest closing price: HKD 12.76 - Total shares: 9.988 billion - Total market capitalization: HKD 1,274.44 billion - 52-week high/low: HKD 13.72 / HKD 6.43 - Debt-to-asset ratio: 69.89% - Price-to-earnings ratio: 22.15 [4] Market Analysis - The company experienced a revenue decline of 17.5% in FY2025, with mainland China sales at HKD 746 billion (down 17%) and Hong Kong/Macau at HKD 151 billion (down 21%) [6] - Same-store sales in mainland China showed a gradual improvement, with declines narrowing from -26% to -13% over the fiscal year [7] Product Analysis - The sales of priced gold products doubled, while traditional gold products saw a decline of 29.4%. The share of priced gold products increased from 19% in 2024 to 29% in 2025 [10] - The "Heritage" series has become a best-seller, contributing significantly to sales, with new product lines launched in 2024 and 2025 exceeding annual targets [10] Profitability Analysis - The operating profit for FY2025 was HKD 147.46 billion, reflecting a 9.8% increase year-on-year. The gross margin improved by 550 basis points to 29.5% due to high-margin products and strict cost control [10] Investment Recommendations and Earnings Forecast - The company is projected to achieve revenue growth rates of 3.3%, 5.5%, and 4.2% for FY2026 to FY2028, with net profit growth rates of 19%, 16%, and 7% respectively. The expected EPS for these years are HKD 0.71, 0.82, and 0.88, with corresponding P/E ratios of 18x, 16x, and 14x [11][14]