Core Viewpoint - Yongjia Group (03322) anticipates a reduced after-tax loss of approximately HKD 60 million for the six months ending June 30, 2025, compared to an after-tax loss of HKD 86 million for the same period last year [1] Financial Performance - The expected reduction in after-tax loss is primarily attributed to the high fashion retail business achieving an operating profit of approximately HKD 7 million, a significant improvement of HKD 59 million from an operating loss of HKD 52 million in the same period last year [1] - The turnaround to profitability in the high fashion retail segment is due to the introduction of franchise stores for a rapidly growing brand, enhancing growth and profitability [1] Operational Challenges - The sportswear manufacturing segment is projected to incur an operating loss of approximately HKD 19 million, contrasting with an operating profit of HKD 1 million in the same period last year [1] - The operating loss in the sportswear segment is primarily due to issues with raw materials at the company's Southeast Asian production facilities, leading to higher-than-expected production and transportation costs [1]

Core Viewpoint - The luxury goods industry is experiencing a temporary cooling period, but this is seen as a market adjustment rather than a long-term trend. The demand for luxury goods is deeply rooted in human nature and transcends economic conditions [1][2][15]. Group 1: Market Resilience - Historical data shows that the luxury goods market has consistently demonstrated strong recovery after crises, such as the 2009 financial crisis and the 2020 pandemic, with a compound annual growth rate of over 5% since 2000 [3][15]. - The luxury goods sector is characterized by a unique ability to rebound, as evidenced by brands like Hermès and Bottega Veneta, which have thrived even during downturns by maintaining exclusivity and quality [3][12][13]. Group 2: Consumer Demographics - The primary consumers of luxury goods include ultra-high-net-worth individuals, stable high-net-worth individuals, and culturally aware middle-class consumers, who are less affected by economic downturns [6][8]. - Emerging markets, particularly in Asia, are seeing a rise in affluent consumers, while the "Henry" group in the U.S. represents a significant target demographic for luxury brands [8][21]. Group 3: Brand Dynamics - Luxury brands possess a strong competitive advantage through their historical narratives and cultural significance, which create a protective moat against market fluctuations [9][12]. - The luxury sector benefits from absolute pricing power and supply control, allowing brands to maintain exclusivity and resist deflationary pressures [12][13]. Group 4: Current Market Trends - The current downturn in the luxury market is viewed as a necessary cleansing process, eliminating unsustainable growth patterns and allowing for a focus on high-quality brands [15][16]. - The luxury industry is entering an era dominated by "super brands," which are outperforming the market average due to their scale, brand equity, and emotional connection with consumers [20]. Group 5: Future Opportunities - New growth drivers are emerging in the luxury market, particularly in regions like China, Southeast Asia, and the Middle East, as well as among younger generations who prioritize sustainability and personalization [21]. - The luxury goods sector is adapting its value system and growth logic to align with evolving consumer demands, indicating a robust long-term outlook despite short-term fluctuations [21].