Core Insights - Chow Tai Fook Jewellery Group is accelerating its overseas strategy as part of its brand transformation, highlighted by the opening of a strategic store in Bangkok and the appointment of Yang Yang as Global Brand Ambassador [1][3]. Group Overview - The Group operates over 5,000 stores globally and has a market capitalization of approximately HK$122 billion (US$16 billion) as of December 31, 2025, focusing on luxury destinations in international markets [2]. Brand Transformation - The new store at Siam Paragon showcases a blend of modern sophistication and cultural heritage, featuring exclusive pieces that honor local Thai culture [4]. - The appointment of Yang Yang aims to engage new audiences and enhance emotional connections with overseas consumers, positioning the brand as a modern embodiment of Chinese luxury [3][6]. International Expansion Strategy - Chow Tai Fook's international expansion is guided by revitalizing existing markets and entering high-potential new territories, with retail sales in the Other Markets segment growing nearly 17% year-on-year [6]. - The Group plans to open its first store in Australia and an additional store in Canada by June 2026, along with intentions to expand into the Middle East within two years [7]. Heritage and Modern Luxury - Celebrating its 95th anniversary, the Group's brand transformation journey began in 2024, blending heritage with contemporary designs to showcase Chinese artistry globally [8]. - The Group has appointed a Creative Director with international exposure to enhance innovative design and branding, introducing signature collections like CTF Rouge and CTF Joie [9]. Product Portfolio - Chow Tai Fook's brand portfolio includes the flagship brand, HEARTS ON FIRE, ENZO, and MONOLOGUE, offering a wide variety of products and expanding its range of IP collaborations [11].

Core Viewpoint - CTFJ reported a 1.9% YoY decline in retail sales value (RSV) for 1QFY26, indicating a sequential recovery after previous weaknesses, supported by a net reduction of 311 stores, reflecting effective strategies to close underperforming locations and redirect traffic to better-performing stores [1][2] Group 1: Financial Performance - The RSV decline of 1.9% YoY during April to June 2025 aligns with preliminary figures, with June showing slightly worse performance than May due to earlier festivals and sales campaigns [2] - Despite the decline, CTFJ's strategies are expected to lead to a positive same-store sales growth (SSSG) for FY26, with a target of mid-single-digit growth [2][6] Group 2: Store Performance and Strategy - CTFJ experienced a net closure of 307 stores in 1QFY26, bringing the total to 6,337 stores, a 16% YoY reduction, primarily affecting franchised stores in lower-tier cities [3] - The SSSG of franchised stores remained flat, outperforming self-operated stores, indicating successful resource reallocation from closed underperforming stores [3] Group 3: Brand Development - CTFJ is focusing on wealthier market segments with the launch of premium product lines, such as the CTF Joie Collection and High Jewellery Collection, which could enhance brand value and boost sales of mainstream products [4] Group 4: Valuation and Outlook - The target price (TP) has been raised to HK$15.2 based on a 15x FY27E P/E, reflecting confidence in CTFJ's strategies to maintain its market leadership and improve earnings through better SSSG and reduced gold hedging losses [6] - The expected FY26E dividend yield of 5.6% is considered attractive [6]