Xinda Securities·2026-01-21 14:01Investment Rating - The investment rating for Chow Tai Fook (1929.HK) is not explicitly stated in the provided documents, but the overall sentiment appears positive based on the performance metrics discussed [1]. Core Insights - Chow Tai Fook reported a retail value increase of 17.8% year-on-year for the period of October to December 2025, with the mainland China market growing by 16.9% and markets outside mainland China by 22.9% [1]. - Same-store sales in mainland China increased by 21.4% year-on-year, while sales outside mainland China rose by 14.3%, indicating a significant improvement in the jewelry consumption atmosphere [2]. - The proportion of priced jewelry has significantly increased, with a year-on-year growth of 53.4% for priced jewelry and 13.1% for gold jewelry, leading to a gross margin improvement [2]. - The company plans to enhance its international market expansion, with new stores expected to open in high-end locations by June 2026 [3]. Financial Performance Summary - For FY2025, Chow Tai Fook's revenue was HKD 89,656 million, with a projected increase to HKD 94,115 million in FY2026, representing a 5% growth [4]. - The net profit attributable to the parent company for FY2025 was HKD 5,916 million, expected to rise to HKD 8,760 million in FY2026, reflecting a 48% increase [4]. - Earnings per share (EPS) is projected to grow from HKD 0.59 in FY2025 to HKD 0.89 in FY2026 [4]. Operational Insights - The company closed 230 stores in mainland China during the October to December 2025 period, resulting in a total of 5,433 stores, with a direct franchise ratio of 28.4% to 71.6% [3]. - Chow Tai Fook is focusing on brand transformation and has introduced new products, including collaborations with Disney for themed blind box series [2]. Profitability and Valuation Metrics - The projected price-to-earnings (P/E) ratios for FY2026, FY2027, and FY2028 are 15.4X, 13.7X, and 12.3X respectively [3]. - The gross margin is expected to improve from 29.51% in FY2025 to 32.22% in FY2026 [6].