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]