Investment Rating - The investment rating for the company is "Hold" based on the analysis of its performance and market conditions [1]. Core Insights - The company reported a retail value growth of 13% year-on-year for FY26Q1, with same-store sales increasing by 5%. The proportion of retail value from priced gold increased from 12% to 17% compared to the same period last year, with same-store growth of 73% [1][2]. - The recovery in sales growth in mainland China reached nearly 20%, with retail value growth of 14% in FY26Q1. Self-operated stores outperformed brand stores, with self-operated retail income growing by 31% and same-store growth of 19% [2][3]. - The company aims for a net increase of 72 stores globally in FY2026, with a target of 50 new stores in mainland China, primarily expected to be achieved in the second half of the fiscal year [3]. Financial Performance Summary - Revenue projections for FY2026 to FY2028 are estimated at HKD 15,284 million, HKD 17,180 million, and HKD 18,740 million, representing year-on-year growth of 15%, 12%, and 9% respectively. Net profit attributable to the parent company is projected to be HKD 1,505 million, HKD 1,731 million, and HKD 1,980 million, with growth rates of 37%, 15%, and 14% respectively [3][6]. - Earnings per share (EPS) are forecasted to be HKD 2.56, HKD 2.95, and HKD 3.37 for FY2026, FY2027, and FY2028, respectively, with corresponding price-to-earnings (P/E) ratios of 8, 7, and 6 [3][6].

Core Viewpoint - Chow Tai Fook's FY25 performance exceeded expectations due to effective strategic adjustments, with a gradual recovery anticipated in the industry, highlighting the value of leading companies [2][4]. Financial Performance - FY25 revenue was HKD 89.66 billion, down 17.5% year-on-year, with a decline of 18.4% in the first half and 15.1% in the second half [2]. - The net profit attributable to shareholders was HKD 5.92 billion, a decrease of 9.0% year-on-year, with the first half down 44.4% and the second half up 73.8% [3]. - The company declared a dividend of HKD 0.52 per share, with a payout ratio of 87.8% [2]. Revenue Breakdown - Revenue by region showed declines: Mainland direct sales down 18.2%, franchise sales down 15.0%, and Hong Kong/Macau down 20.6% [2]. - The number of stores in Mainland China decreased by 896 to 6,274, with same-store sales down 19.4% for direct stores and 13.9% for franchises [2]. Product Performance - Revenue from gold by weight decreased by 29.4%, while revenue from priced gold increased by 105.5%, and jewelry embedding revenue fell by 13.8% [2]. - Priced gold products accounted for 18.1% of gold product revenue, with significant sales from the Heritage and Palace Museum series exceeding HKD 4 billion each [2]. Margin and Profitability - Gross margin improved to 29.5%, up 5.5 percentage points year-on-year, benefiting from rising gold prices and product transformation strategies [3]. - Operating profit margin was 16.4%, an increase of 4.1 percentage points year-on-year [3]. Market Trends - Since April 2024, gold prices have been rising, with consumer confidence in gold's long-term value increasing due to international conflicts [3]. - The retail performance in April and May 2025 showed a slight decline of 1.7% year-on-year, with Mainland China down 2.9% and Hong Kong/Macau up 6.3% [3]. Management Guidance - Management is cautiously optimistic, projecting mid-single-digit growth for same-store sales in FY26 for both Mainland and Hong Kong/Macau [4]. - Expected gross margin decline of 0.8-1.2 percentage points due to last year's gold price benefits, but a steady increase is anticipated when excluding gold price impacts [4]. Strategic Outlook - The company is focused on brand and product-driven growth, with plans to open 20 new image stores and launch a high-end jewelry series [4]. - Projected net profits for FY26 and FY27 are HKD 8.39 billion and HKD 9.28 billion, representing year-on-year growth of 42% and 11% respectively [4].