Core Viewpoint - The company expects a revenue and net profit decline of 17.5% and 9.0% respectively for FY25, primarily due to high gold prices suppressing end demand, with a narrowing decline in FY25H2 [1][2] Revenue and Profit Performance - FY25 revenue reached HKD 896.6 billion, down 17.5%, with operating profit at HKD 147.5 billion, up 9.8%, and net profit at HKD 59.2 billion, down 9.0% [1][2] - Revenue for FY25H1 and FY25H2 was HKD 394.1 billion (-20.4%) and HKD 502.5 billion (-15.1%) respectively, while net profit for the same periods was HKD 25.3 billion (-44.4%) and HKD 33.9 billion (+73.8%) [2] Regional Performance - Revenue in mainland China for FY25 was HKD 745.6 billion, down 16.9%, with retail and wholesale channel revenues at HKD 323.6 billion (-16.1%) and HKD 422.0 billion (-17.5%) respectively [2] - Same-store sales in mainland China declined by 19.4%, with quarterly declines improving from -26.4% in Q1 to -13.2% in Q4 [2] Product Performance - The share of fixed-price gold and gold-inlaid products increased significantly, with revenue from fixed-price gold jewelry reaching HKD 127.8 billion, up 104.5%, accounting for 14.6% of retail sales [3] - Revenue from weight-based gold jewelry products fell to HKD 579.6 billion, down 29.4%, while diamond-inlaid products generated HKD 125.2 billion, down 13.3% [3] Store Optimization - The company optimized its store network, ending FY25 with 6,644 stores, a net decrease of 842 stores, while opening high-quality and image stores [4] - The company plans to open 20 new image stores in FY26 across mainland China, Hong Kong, and other international markets [4] Margin and Profitability - The gross margin improved to 29.5%, up 5.5 percentage points, driven by rising gold prices and an increased share of fixed-price products [5] - The company incurred a loss of HKD 61.8 billion from gold lending hedging, which accounted for 6.9% of revenue, impacting the net margin, which was 6.7%, up 0.6 percentage points [5] Future Outlook - Retail value decline is expected to narrow to low single digits in April-May 2025, with a potential improvement in terminal demand [7] - Revenue forecasts for FY26-28 are HKD 937.9 billion, HKD 986.9 billion, and HKD 1,049.5 billion, with net profits of HKD 78.3 billion, HKD 86.2 billion, and HKD 95.4 billion respectively [8]

Core Viewpoint - The recent announcement by Chow Tai Fook, a leading player in the gold and jewelry industry with a market capitalization exceeding HKD 100 billion, to issue convertible bonds has brought attention back to this financial instrument in the Hong Kong stock market [1][2]. Group 1: Convertible Bond Issuance - Chow Tai Fook plans to issue HKD 8.8 billion in convertible bonds, maturing in 2030, with a conversion price set at HKD 17.32 per share [4][5][8]. - The interest rate for the bonds is set at 0.375% per annum, with semi-annual payments starting from December 30, 2025 [6]. - The net proceeds from the bond issuance are expected to be approximately HKD 8.715 billion, which will be allocated for the development of gold jewelry business, store upgrades, market expansion, and general working capital [7]. Group 2: Market Context and Comparisons - Since June, several companies in the Hong Kong market, including Chow Tai Fook, have announced plans to issue convertible bonds, indicating a trend in this financial instrument [2][13]. - The convertible bonds in the Hong Kong market share similarities with convertible corporate bonds in the A-share market, but there are notable differences in details such as maturity periods and transferability [3][16]. - Chow Tai Fook's bond issuance is significant as it marks the company's first major transaction in the capital market since its IPO in 2011, reflecting its robust development in the capital market despite geopolitical challenges [10][11]. Group 3: Strategic Benefits - The issuance of convertible bonds is viewed as an appropriate method for raising additional funds, providing a low-cost financing option that strengthens the company's balance sheet and supports growth initiatives [11]. - The company aims to attract institutional investors through the convertible bonds, thereby diversifying its investor base and potentially increasing public shareholding and liquidity [12].