Core Viewpoint - Haitong International has given a "Buy" rating to Luk Fook Holdings (00590), predicting a net profit of HKD 15.78 billion, HKD 18.00 billion, and HKD 19.77 billion for the fiscal years 2026-2028, with a target price of HKD 40.35 based on a 15x PE for FY26 [1] Group 1: Financial Performance - For FY26H1, the company reported revenue of HKD 68.43 billion, a year-on-year increase of 25.6%, with a gross profit of HKD 23.73 billion, up 33.2% year-on-year, resulting in a gross margin of 34.7%, an increase of 2.0 percentage points [1] - Operating profit reached HKD 7.80 billion, reflecting a year-on-year growth of 45.4%, with an operating margin of 11.4%, up 1.6 percentage points [1] - The net profit attributable to shareholders was HKD 6.19 billion, a 42.5% increase year-on-year, with a net margin of 8.8%, up 1.1 percentage points [1] - The interim dividend was set at HKD 0.55 per share, with a payout ratio of 52% [1] Group 2: Sales and Store Expansion - Same-store sales improved, with overall same-store sales for FY26H1 increasing by 7.7%. By category, same-store sales for gold and platinum increased by 2.7%, while same-store sales for priced jewelry surged by 22.2% [2] - By region, same-store sales in Hong Kong, Macau, and overseas rose by 7.2%, while same-store sales in mainland China increased by 10.9%. From October 1 to November 21, same-store sales in both markets showed double-digit growth, with mainland sales significantly improving compared to FY26Q2 [2] - As of FY26H1, the total number of stores globally was 3,113, with a net decrease of 174 stores. The company plans to open 20 new stores overseas in FY26 and aims to enter at least three new countries and add 50 overseas stores over the next three years [2] Group 3: Margin and Cost Management - The gross margin for FY26H1 was 34.7%, an increase of 2.0 percentage points, driven by rising gold prices and an increase in the proportion of priced jewelry sales. Sales of gold and platinum amounted to HKD 40.96 billion, up 11.0% year-on-year, with a gross margin of 30.3%, an increase of 2.8 percentage points [3] - Sales of priced jewelry reached HKD 22.76 billion, a significant increase of 67.9%, with a gross margin of 36.8%, down 0.5 percentage points. The introduction of new products like ice diamonds significantly boosted wholesale revenue [3] - The sales expense ratio decreased to 16.3%, down 1.5 percentage points year-on-year, and the administrative expense ratio was 2.7%, down 0.8 percentage points, benefiting from operational leverage [3]

Core Viewpoint - Haitong International has given a "Buy" rating to Luk Fook Holdings (00590), predicting a net profit of HKD 15.78 billion, 18.00 billion, and 19.77 billion for the fiscal years 2026-2028, with a target price of HKD 40.35 based on a 15x PE for FY26 [1] Group 1: Financial Performance - For FY26H1, the company reported revenue of HKD 68.43 billion, a year-on-year increase of 25.6%, with a gross profit of HKD 23.73 billion, up 33.2%, resulting in a gross margin of 34.7%, an increase of 2.0 percentage points [1] - Operating profit reached HKD 7.80 billion, reflecting a 45.4% year-on-year growth, with an operating margin of 11.4%, up 1.6 percentage points [1] - The net profit attributable to shareholders was HKD 6.19 billion, a 42.5% increase year-on-year, with a net margin of 8.8%, up 1.1 percentage points [1] - The interim dividend per share was HKD 0.55, with a payout ratio of 52% [1] Group 2: Sales and Market Expansion - Same-store sales improved, with overall same-store sales for FY26H1 increasing by 7.7%. By category, same-store sales for gold and platinum increased by 2.7%, while same-store sales for priced jewelry surged by 22.2% [2] - By region, same-store sales in Hong Kong, Macau, and overseas rose by 7.2%, while same-store sales in mainland China increased by 10.9%. From October 1 to November 21, same-store sales in all markets showed double-digit growth, with mainland China showing significant improvement compared to FY26Q2 [2] - As of FY26H1, the total number of stores globally was 3,113, with a net decrease of 174 stores. The company plans to open 20 new stores overseas in FY26 and enter at least three new countries while adding 50 overseas stores over the next three years [2] Group 3: Margin and Cost Management - The gross margin improved to 34.7%, up 2.0 percentage points, driven by rising gold prices and an increased proportion of priced jewelry sales. Sales of gold and platinum amounted to HKD 40.96 billion, up 11.0%, with a gross margin of 30.3%, an increase of 2.8 percentage points [3] - Sales of priced jewelry reached HKD 22.76 billion, a 67.9% increase, with a gross margin of 36.8%, down 0.5 percentage points. The introduction of new products like ice diamonds significantly boosted wholesale revenue [3] - The sales expense ratio decreased to 16.3%, down 1.5 percentage points, and the administrative expense ratio fell to 2.7%, down 0.8 percentage points, benefiting from operational leverage [3]

Investment Rating - The report assigns an "Outperform" rating to the company, with a target price of 40.35 HKD based on a 15x PE for FY2026 [5][13]. Core Insights - The company is experiencing improved same-store sales, particularly in Mainland China, and is accelerating its overseas expansion efforts [15]. - Rising gold prices and an increased share of priced jewelry are driving improvements in gross profit margin (GPM), which reached 34.7% in FY26H1, up 2.0 percentage points year-on-year [3][16]. - The company plans to open 20 new overseas stores in FY26 and aims to enter at least three new countries and add 50 overseas stores over the next three years [15]. Financial Summary - For FY26H1, total revenue was 6.84 billion HKD, a year-on-year increase of 25.6%, with gross profit of 2.37 billion HKD, up 33.2% [14]. - The net profit attributable to shareholders for FY26H1 was 619 million HKD, reflecting a 42.5% year-on-year increase, with a net profit margin of 8.8% [14]. - The company forecasts total revenue for FY2026 to be 15.56 billion HKD, with a projected net profit of 1.58 billion HKD [4][5].

Group 1 - The core viewpoint of the report indicates that the company's same-store sales are continuously improving, driven by the pricing of jewelry, and it has made its first entry into the Vietnamese market [1][2]. - The investment recommendation is to maintain a "Buy" rating, with projected net profits for the fiscal years 2026-2028 at 1.578 billion, 1.800 billion, and 1.977 billion HKD respectively, and a target price of 40.35 HKD based on a 15x PE for FY26 [1]. - For FY26H1, the company reported revenues of 6.843 billion HKD, a year-on-year increase of 25.6%, with a gross profit of 2.373 billion HKD, reflecting a 33.2% increase [1]. Group 2 - Same-store sales improved by 7.7% year-on-year in FY26H1, with jewelry pricing driving a 22.2% increase in same-store sales for priced jewelry [2]. - As of FY26H1, the total number of global stores was 3,113, with a net decrease of 174 stores, while the company plans to open 20 new stores overseas in FY26 and enter at least three new countries by FY28 [2]. - The gross profit margin for FY26H1 was 34.7%, up 2.0 percentage points year-on-year, benefiting from rising gold prices and an increased proportion of priced jewelry sales [3].

Investment Rating - The report maintains a "Buy" rating for the company [5][10]. Core Insights - The company's same-store sales continue to improve, driven by pricing jewelry and its first entry into the Vietnamese market [2][3]. - The company plans to increase its overseas store count and expand into at least three new countries over the next three years [10]. Financial Performance - For FY26H1, the company reported revenue of HKD 6.843 billion, a year-on-year increase of 25.6%, with a gross profit of HKD 2.373 billion, up 33.2% year-on-year, resulting in a gross margin of 34.7% [10]. - The operating profit reached HKD 780 million, reflecting a 45.4% year-on-year increase, with an operating margin of 11.4% [10]. - The net profit attributable to shareholders was HKD 619 million, a 42.5% increase year-on-year, with a net margin of 8.8% [10]. Same-Store Sales and Market Expansion - Overall same-store sales increased by 7.7% year-on-year in FY26H1, with gold and platinum same-store sales up 2.7% and pricing jewelry same-store sales up 22.2% [10]. - The company plans to add 20 new stores overseas in FY26 and aims to increase its global store count [10]. Profitability and Cost Management - The gross margin improved to 34.7%, benefiting from rising gold prices and an increased proportion of pricing jewelry sales [10]. - The sales expense ratio decreased to 16.3%, and the administrative expense ratio fell to 2.7%, indicating effective cost management [10]. Financial Projections - The forecast for net profit attributable to shareholders for FY26, FY27, and FY28 is HKD 1.578 billion, HKD 1.800 billion, and HKD 1.977 billion, respectively [10]. - The report assigns a target price of HKD 40.35 based on a 15x PE ratio for FY26 [10].