Core Viewpoint - The company has shown stable overall performance in the first half of the fiscal year, with accelerated growth since October, despite a slight decline in revenue due to strategic store reductions and high gold prices impacting product weight [1] Group 1: Financial Performance - For the first half of the fiscal year 2026 (April 2025 - September 2025), the company achieved revenue of HKD 38.986 billion, a slight year-on-year decrease of 1.1% [1] - The net profit attributable to shareholders was HKD 2.534 billion, reflecting a minor year-on-year increase of 0.13% [1] - From October 1 to November 18, the group’s retail value increased by 33.9%, with same-store sales in mainland China growing by 38.8% [1] Group 2: Business Segmentation - Retail revenue in mainland China increased by 8.1%, accounting for 38.4% of total revenue, while wholesale revenue decreased by 10.2%, making up 44.2% of total revenue [2] - Revenue from Hong Kong, Macau, and overseas markets grew by 6.5%, representing 17.4% of total revenue [2] - The revenue from priced jewelry increased by 9.3%, with a revenue share of 29.6%, indicating strong performance in priced gold products [2] Group 3: Operational Efficiency - The overall gross margin was maintained above 30%, recorded at 30.5%, despite a year-on-year decrease of 0.9 percentage points [3] - The selling and administrative expense ratio improved, decreasing by 1.2 percentage points to 14% due to optimized cost control [3] - Inventory turnover days decreased by 33 days to 424 days, indicating improved operational efficiency [3] Group 4: Future Outlook - The company plans to enhance the layout of high-margin priced products and optimize store structures to boost same-store sales [4] - The fair value loss on gold loans is expected to be higher than previously anticipated, leading to a downward revision of net profit forecasts for fiscal years 2026-2028 [4] - The projected net profits for 2026, 2027, and 2028 are HKD 7.141 billion, HKD 8.178 billion, and HKD 9.061 billion, respectively, with corresponding PE ratios of 21.1, 18.4, and 16.6 times [4]

Investment Rating - The investment rating for Chow Tai Fook (01929.HK) is "Outperform the Market" [7] Core Views - The overall performance for the first half of the fiscal year is stable, with accelerated growth since October. For the first half of fiscal year 2026 (April 2025 - September 2025), the company achieved revenue of HKD 38.986 billion, a slight decline of 1.1% year-on-year, impacted by store strategy contraction and high gold prices affecting product weight. The net profit attributable to shareholders was HKD 2.534 billion, a slight increase of 0.13%, maintaining overall stability. Since October, the company has seen further acceleration in growth, with retail value increasing by 33.9% year-on-year from October 1 to November 18, and same-store sales in mainland China growing by 38.8% [1][4] Summary by Sections Revenue and Profitability - The retail revenue in mainland China increased by 8.1%, accounting for 38.4% of total revenue. Wholesale revenue in mainland China decreased by 10.2%, making up 44.2% of total revenue due to overall store contraction and reduced purchasing under high gold prices. Revenue from Hong Kong, Macau, and overseas markets grew by 6.5%, accounting for 17.4% of total revenue. The revenue from priced jewelry increased by 9.3%, representing 29.6% of total revenue, with priced gold performing particularly well [2] Cost Management and Margins - The overall gross margin remained above 30%, at 30.5%, a decrease of 0.9 percentage points year-on-year, primarily due to a reduced increase in gold prices compared to the same period last year. The increase in the proportion of priced products positively impacted the gross margin. The selling and administrative expense ratio decreased by 1.2 percentage points to 14%, benefiting from cost control optimization. Inventory turnover days shortened by 33 days to 424 days [3] Future Outlook and Adjustments - The company plans to further enhance the layout of high-margin priced products and optimize store structure to boost same-store sales. Given the 32.4% increase in London gold prices since the beginning of fiscal year 2026, which is 7.4 percentage points lower than the previous fiscal year's increase of 39.8%, the expected fair value loss on gold loans has been adjusted higher. Consequently, the net profit forecasts for fiscal years 2026-2028 have been revised down to HKD 7.141 billion, HKD 8.178 billion, and HKD 9.061 billion, respectively, with corresponding P/E ratios of 21.1, 18.4, and 16.6 [4][5]