HK Stock Market Move | CHOW TAI FOOK (01929) rose more than 4%, the company's operational strategy adjustment highlights effectiveness, and Daiwa believes its stock price is still severely undervalued.

CHOW TAI FOOK (01929) rose more than 4%, up 4.36% to HKD 7.9 at the time of publication, with a turnover of HKD 40,873,600. In terms of news, Daiwa released a research report stating that the market has overestimated the competition concerns between CHOW TAI FOOK and LAOPU GOLD, and underestimated the positive factors brought by the brand upgrade measures CHOW TAI FOOK is currently undergoing. In addition, the bank believes that the market has overlooked the potential for CHOW TAI FOOK's traditional gold series, HUA Collection, to evolve into an independent brand, thereby unlocking significant value. Furthermore, the bank believes that CHOW TAI FOOK's previous rapid store expansion strategy is rapidly reversing, with the expectation that net profit will bottom out in the second half of the 2024 fiscal year. Finally, the company's stock price is still severely undervalued. Daiwa has raised CHOW TAI FOOK's rating from "underperform" to "buy" and raised its target price from HKD 7 to HKD 11, believing that the group's profitability and valuation are gradually returning to average. As of December 31, 2024, CHOW TAI FOOK had 6,836 jewelry retail stores, with a net closure of 255 stores in the quarter. Among them, CHOW TAI FOOK's jewelry retail stores in mainland China reached 6,685, with a net closure of 261 stores in the quarter; CHOW TAI FOOK's jewelry retail stores in Hong Kong, Macau, and other markets in China totaled 151, with a net opening of 6 stores in the quarter. CITIC SEC previously stated that the company has actively adjusted its product and pricing strategies, with significant results. The bank believes that CHOW TAI FOOK has outstanding aesthetic understanding and excellent craftsmanship, and will continue to leverage its product strength to lead the industry, launching more high-margin differentiated products such as the Forbidden City and Chuanfu series, with the profit side expected to see corresponding improvement.