Core Viewpoint - The company reported a decline in overall retail value for Q2 2025, with a year-on-year decrease of 1.9%, driven by a 3.3% drop in mainland China, while Hong Kong and Macau markets showed a positive growth of 7.8% [1] Sales Performance - Overall retail value decreased by 1.9% year-on-year, with mainland China down 3.3% and Hong Kong and Macau up 7.8% [1] - Same-store sales in mainland China fell by 3.3%, with same-store sales volume down 11.1%, while Hong Kong and Macau saw a 2.2% increase in same-store sales, despite an 8.8% drop in same-store sales volume [1] - E-commerce retail value in mainland China grew by 27% year-on-year, contributing 7.6% to retail value and 16.9% to sales volume during the quarter, driven by strong demand from IP collaborations and the 618 shopping festival [1] Product Analysis - Retail sales of gold jewelry improved, with a year-on-year decline of 3.6% in mainland China and a positive growth of 11.4% in Hong Kong and Macau [2] - The share of priced gold products in mainland China increased from 15.8% to 19.8%, with a year-on-year growth of 20.8% [2] - Jewelry and inlaid products achieved positive growth, with mainland China retail value up 0.5% and Hong Kong and Macau up 4.8% [2] Brand Transformation - The company initiated a brand transformation journey in FY25, focusing on product optimization and opening new image stores, with plans to continue this in FY26 [2] - A new high-end jewelry series "Timeless Harmony" was launched in Hangzhou, with plans for exhibitions in major cities [2] - Collaborations with trendy brands, such as the 周大福 x CLOT series, target the younger generation [2] Store Network Optimization - The company reduced its store count from 6,644 to 6,337, with a net decrease of 307 stores, including a reduction of 310 周大福 jewelry stores [3] - The company continues to selectively open high-productivity stores while optimizing its store network [3] Investment Outlook - The gold jewelry industry is expected to enter a low base growth phase starting Q2 2025, with strong performance anticipated [3] - The company is projected to benefit from the trend of self-consumption and the increasing share of priced products, with revenue growth estimates of 3.3%, 5.5%, and 4.2% for FY26-28 [3] - Expected net profit growth rates are 19%, 16%, and 7% for the same period, with EPS estimates of 0.71, 0.83, and 0.89 HKD per share [3]

Investment Rating - The investment rating for Chow Tai Fook (1929.HK) is "Buy" and is maintained [5][12][18] Core Views - The company reported a 1.9% year-on-year decline in overall retail value for the period from April to June 2025, with a 3.3% decline in mainland China, while Hong Kong, Macau, and other markets saw a 7.8% increase [5][7] - Same-store sales in mainland China decreased by 3.3%, with same-store sales volume down by 11.1%. In Hong Kong and Macau, same-store sales increased by 2.2%, with a same-store sales volume decline of 8.8% [5][7] - The company continues to benefit from the growth of priced products and low base effects, leading to improved same-store sales [6][12] Company Overview - In mainland China, the same-store sales decline narrowed to 3.3%, while franchise store same-store sales remained flat [7] - In Hong Kong and Macau, same-store sales grew by 2.2%, with Hong Kong increasing by 0.2% and Macau by 9.5% [7] - E-commerce retail value in mainland China grew by 27% year-on-year, contributing 7.6% to retail value and 16.9% to sales volume during the quarter, driven by IP collaborations and strong demand during the 618 shopping festival [7] Product Analysis - Retail sales growth for gold jewelry continues to improve, with a 20.8% year-on-year increase in priced gold products in mainland China, rising from 15.8% to 19.8% of total sales [9] - Both jewelry and embedded products achieved positive growth, with mainland retail value increasing by 0.5% and Hong Kong and Macau by 4.8% [9] - The company is undergoing a brand transformation, optimizing products and opening new image stores to meet high-end customer demands [9][10] Store Network - The company reduced its store count from 6,644 to 6,337, closing 307 stores, with Chow Tai Fook jewelry stores decreasing from 6,423 to 6,113 [10][11] - The company continues to close underperforming stores while selectively opening high-productivity stores [10] Investment Recommendations and Profit Forecast - Short-term growth in the gold jewelry industry is expected due to a low base effect starting from Q2 2025, with strong performance anticipated [12] - Long-term trends indicate a growing demand for self-consumption in gold jewelry, benefiting leading companies with strong product capabilities [12] - Revenue growth rates for the fiscal years 2026-2028 are projected at 3.3%, 5.5%, and 4.2%, with net profit growth rates of 19%, 16%, and 7% respectively [12][14]