Summary of LUK FOOK Holdings Conference Call Company Overview - **Company**: LUK FOOK Holdings - **Date**: January 16, 2026 Key Industry Insights - **Market Dynamics**: The adjustment of value-added tax (VAT) in mainland China and the appreciation of the Renminbi have enhanced the price competitiveness of the Hong Kong and Macau markets, attracting more mainland tourists, which benefits LUK FOOK's retail business in these regions. Approximately 75% of tourists in this market are from mainland China [2][7]. - **Product Differentiation**: LUK FOOK has introduced differentiated products such as ice diamonds and IP collaboration items, with gold-inlaid diamond products showing particularly strong performance, effectively driving overall sales growth and achieving double-digit growth in the mainland market [2][5]. Financial Performance - **Sales Growth**: The company expects double-digit growth in both revenue and profit for the full year, with profit growth anticipated to outpace revenue growth [3][25]. - **Gold Price Impact**: The demand for fixed-price gold products remains strong, with average transaction prices increasing by 50-60% due to rising gold prices, leading to increased sales volume [2][8][10]. Store Network Strategy - **Store Management**: LUK FOOK has been optimizing its store network by reducing the number of stores in lower-tier cities while increasing the number of direct-operated and premium brand stores. The company has accelerated its overseas expansion, expecting to complete the goal of opening 50 new stores within three years ahead of schedule [2][6][20]. - **Store Closures**: In the first three quarters of 2025, approximately 200 stores were closed, with a net closure of over 170 stores in the first half of the fiscal year [6]. Pricing Strategy - **Price Adjustments**: LUK FOOK has raised gold prices twice in the fourth quarter, with an 8% increase in weight-based gold prices due to VAT changes. The sales differences before and after price adjustments are gradually decreasing [11][21]. Product Performance - **Gold and Diamond Sales**: The sales of K-gold and diamond products are recovering, but the sales increase of weight-based gold products has been more significant due to recent gold price hikes [10]. - **New Product Launches**: The Tang Palace Night Banquet series has performed well, accounting for about 1% of overall sales, with plans to introduce more IP series in the next three years to maintain market competitiveness [12][29]. Overseas Market Insights - **Market Performance**: The overseas market is performing better than the mainland, with North America showing significant sales levels comparable to Hong Kong. The company plans to open more brand franchise stores in the U.S. and Southeast Asia [2][18][20]. - **Profitability**: Most overseas direct-operated stores are profitable, with a profit margin reaching double digits [30]. Consumer Behavior - **Tourist Spending**: The price difference between the Hong Kong/Macau markets and the mainland positively impacts sales, with an increase in tourist numbers and a decrease in purchasing through agents [7]. Future Outlook - **Growth Projections**: The company anticipates that the overall performance will exceed previous expectations, with a focus on maintaining a stable growth trajectory through strategic store openings and product differentiation [25][30]. Additional Considerations - **Dividend Policy**: The dividend policy remains unchanged, with a minimum dividend of HKD 1.1, and a payout ratio of 45% for amounts exceeding this threshold [26].