Core Viewpoint - The company reported a slight decline in revenue for FY2026H1, but operating profit showed a steady improvement, indicating a recovery trend in its performance [1][2]. Revenue Performance - For FY2026H1, the company's revenue decreased by 1.1% year-on-year to HKD 38.986 billion, while operating profit increased by 0.7% to HKD 6.823 billion, with an operating margin improvement of 0.3 percentage points to 17.5% [1]. - In mainland China, revenue fell by 2.5% to HKD 32.194 billion, with retail channel revenue increasing by 8.1% and wholesale channel revenue decreasing by 10.2% due to store integration [1][2]. Channel Strategy - The company focused on optimizing single-store operations and reported strong growth in e-commerce sales, which increased by 27.6% year-on-year [2]. - As of the end of the reporting period, the company operated 5,663 retail stores in mainland China, with 73% being franchise stores, and closed 611 stores since the beginning of the fiscal year [2]. Product Performance - The sales revenue from priced gold jewelry increased by 9.3%, accounting for 29.6% of total revenue, while revenue from gold jewelry priced by weight decreased by 3.8% [2]. - The company emphasized product optimization, with notable sales growth in its signature product series, achieving HKD 3.4 billion in sales for the Chuanxi, Chuanfu, and Palace Museum series, a 48% increase year-on-year [2]. Regional Performance - Revenue from Hong Kong, Macau, and other regions grew by 6.5% to HKD 6.792 billion, benefiting from a recovery in retail consumption and foot traffic [3]. - The company is actively expanding its international market presence, particularly in Southeast Asia and Oceania, while enhancing the retail experience through store upgrades and new openings [3]. Future Outlook - The company expects a revenue growth of 3% for FY2026 and a 37% increase in net profit attributable to shareholders [3]. - Projections for net profit for FY2026-2028 are HKD 80.92 billion, HKD 92.01 billion, and HKD 103.90 billion, respectively, with a PE ratio of 19 times for FY2026 [4].

Investment Rating - The investment rating for the company is "Buy" [3] Core Views - The company reported a revenue decline of 17.5% year-on-year to HKD 89.656 billion for FY2025, while operating profit increased by 9.8% to HKD 14.746 billion, indicating a significant improvement in profit margins [1][6] - The company is focusing on optimizing its product structure and enhancing its retail network, which is expected to support revenue growth of approximately 4% in FY2026 [2][6] - The sales of priced gold jewelry and products saw a remarkable increase of 105.5%, contributing to the improvement in profit margins [6] Summary by Sections Revenue Performance - FY2025 revenue from mainland China decreased by 16.9% to HKD 74.556 billion, with retail and wholesale channels declining by 16% and 17.5% respectively [1] - Revenue from Hong Kong, Macau, and other regions fell by 20.6% to HKD 15.1 billion, impacted by macroeconomic fluctuations and changes in consumer preferences [2] Profitability - The operating profit margin improved by 4 percentage points to 16.4% in FY2025, despite a decline in net profit attributable to shareholders by 9% to HKD 5.916 billion [1][6] - The company plans to maintain a high dividend payout ratio of approximately 87.8% for FY2025, with a proposed final dividend of HKD 0.32 per share [1] Market Strategy - The company is strategically expanding into Southeast Asia and beyond, with a notable 91% year-on-year growth in online sales in Hong Kong and Macau [2] - The company is expected to continue a cautious approach to store operations, with a focus on high-quality new store openings while reducing the number of underperforming stores [6] Financial Forecast - The forecast for FY2026 includes an expected net profit of HKD 7.546 billion, representing a 27.6% year-on-year increase, with a projected P/E ratio of 16 times [6][10]