Core Viewpoint - Company maintains a "buy" rating for Chow Tai Fook (01929), highlighting its leadership in the jewelry industry, focus on single-store operations, product design optimization, and consumer engagement despite a slight revenue decline in H1 FY2026 [1] Performance Summary - For H1 FY2026, the company's revenue decreased by 1.1% to HKD 38.986 billion, while operating profit increased by 0.7% to HKD 6.823 billion, indicating steady operational improvement [1] - The operating profit margin improved by 0.3 percentage points to 17.5%, and net profit attributable to shareholders rose by 0.1% to HKD 2.534 billion, with an interim dividend of HKD 0.22 per share and a payout ratio of 85.7% [1] Mainland Market Performance - Revenue in mainland China 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 consolidation [2] - The company focused on optimizing single-store operations and saw a 27.6% increase in e-commerce sales, with 5,663 retail stores in mainland China, 73% of which are franchise stores [2] Product Performance - Revenue from priced gold jewelry increased by 9.3%, accounting for 29.6% of total revenue, while revenue from weight-based gold jewelry decreased by 3.8% [3] - The company emphasized product optimization, with notable sales growth in its signature product lines, achieving HKD 3.4 billion in sales for specific collections, a 48% increase [3] Regional Market Performance - Revenue from Hong Kong, Macau, and other regions grew by 6.5% to HKD 6.792 billion, benefiting from improved retail consumption and foot traffic recovery [4] - The company is actively expanding in Southeast Asia and Oceania, enhancing retail experiences through store upgrades and new openings [4] Future Outlook - The company expects a revenue growth of 3.1% for FY2026, reaching HKD 92.453 billion, and a net profit growth of 36.8% to HKD 8.092 billion, driven by rising gold prices and product optimization [5]

Investment Rating - The report maintains a "Strong Buy" rating for Chow Tai Fook [4] Core Views - The overall retail value for FY25Q4 decreased by 11.6% year-on-year, with a 10.4% decline in mainland China retail value. Same-store sales in mainland China dropped by 13.2%, with specific declines in jewelry and gold products [1][7] - The company has seen a narrowing decline in retail values, with notable performance from the "Chuanfu" and "Palace Museum" series, achieving sales of 4 billion HKD each for the fiscal year [1][7] - The company is focusing on channel optimization and improving profitability, with a total of 6,423 stores at the end of FY25, having closed 892 stores during the year [1][7] Financial Data and Valuation - Projected total revenue for FY2025 is 90.375 billion HKD, with a year-on-year decline of 17%. Expected net profit for FY2025 is 5.547 billion HKD, reflecting a 15% decrease [3][11] - The current market capitalization is 90 billion HKD, with a PE ratio of 15X for FY26 [4][12] - The company’s return on equity (ROE) is reported at 25.6% [4] Store Performance - Same-store sales in mainland China for FY25Q4 saw a decline of 13.2%, with a notable 22.5% drop in Hong Kong and Macau [1][7] - The company has opened new fashion stores in Shanghai and Wuhan, which have performed above average in their initial months [1][7] Product Performance - Retail value for jewelry and platinum products in mainland China increased by 2.4% year-on-year, while gold product sales saw a decline of 12.3% [1][7] - The proportion of priced products in the gold category increased significantly from 9.4% in FY24Q4 to 25.6% in FY25Q4, supporting the resilience of the group's gross margin [1][7]