Summary of the Conference Call for Luk Fook Holdings Company Overview - Company: Luk Fook Holdings - Date: October 2025 Key Points Industry Performance - The retail value of the company significantly increased due to the Golden Week and Mid-Autumn Festival, with a notable 67% growth in priced gold categories [2][5] - Sales in Hong Kong, Macau, and overseas markets rose by 19% year-on-year, while retail sales in mainland China increased by 51% [2][5] - The overall retail value grew by 18% and retail income by 15% in Q3 2025, with same-store sales up by 10% [4] Financial Highlights - The average price of priced jewelry rose by 40% year-on-year, contributing to a 51% increase in brand store sales [2][6] - The rapid growth of priced gold jewelry is expected to enhance the company's overall gross margin and net profit, although fluctuations in gold prices remain a concern [2][7] - The company anticipates higher hedge losses in the first half of the fiscal year compared to last year, but overall income and profit conditions are good, minimizing the impact [8] Market Expansion - The company plans to expand its overseas market primarily through franchising, targeting a net increase of 20 overseas stores by the end of 2025 [3][18] - The performance of newly opened stores in Vietnam is promising, with plans for further expansion in the future [15] E-commerce and Retail Strategy - E-commerce channels account for over 60% of sales and are performing well, contributing to a 23% year-on-year increase in overall retail income [2][9][10] - The company has adjusted its promotional strategies, leading to a slight slowdown in same-store growth in mainland China [9] Pricing Strategy - The company has raised prices for priced products in late October 2025, which contributed to strong same-store performance in the first half of the month [11] - Seasonal variations in the proportion of priced jewelry were noted, with a 2% increase in low-priced jewelry to 22% during July-September 2025 [12] Profit Margins - The gross margin for weight categories was 26% last year, while priced categories were at 39%. The company expects an increase in gross margins this year, although the growth rate may not match last year's due to base effects [14] Product Development - New product lines, such as the Tang Palace series, have received positive feedback, and the company plans to continue launching various new designs [19] Dividend Policy - The dividend policy remains unchanged, with a minimum payout of HKD 1.1 per share and a payout ratio of 40%-45% [20]
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