Soochow Securities·2026-01-29 10:20Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook for future performance [1]. Core Insights - Chow Tai Fook is a leading brand in the gold and jewelry industry with a rich history, established in 1929 and listed in Hong Kong in 2011. The company is the largest gold jewelry brand in China, with a total of 5,813 stores by the end of 2025 [7][8]. - The company has shown significant improvement in overall performance, with a retail revenue growth of 18% year-on-year in FY26Q3, driven by strong sales in mainland China and Hong Kong/Macau [14][18]. - The company is undergoing a strategic transformation, focusing on product upgrades and enhancing brand value, which has led to a notable increase in the proportion of fixed-price products in sales [9][20]. - The company has been reducing its number of underperforming stores while improving the efficiency and quality of its remaining outlets, resulting in improved same-store sales performance [7][18]. Financial Summary - Revenue projections for FY2026 to FY2028 are estimated at HKD 94.27 billion, HKD 99.23 billion, and HKD 105.21 billion, respectively, with expected year-on-year growth rates of 5.14%, 5.27%, and 6.03% [1][24]. - Net profit forecasts for the same period are HKD 8.87 billion, HKD 9.96 billion, and HKD 11.06 billion, reflecting growth rates of 50.00%, 12.23%, and 11.04% [1][24]. - The company's earnings per share (EPS) is projected to increase from HKD 0.60 in FY2025 to HKD 1.12 in FY2028, with a corresponding decrease in the price-to-earnings (P/E) ratio from 22.44 to 12.01 [1][24].