HK Stock Market Move | CHOW TAI FOOK (01929) rebounds more than 5%, Bank of America is optimistic about the company's same-store sales bottoming out and potential brand transformation.

CHOW TAI FOOK (01929) rebounded by more than 5%, as of the time of writing, it rose by 5.11%, to 9.47 Hong Kong dollars, with a turnover of 1.49 billion Hong Kong dollars. On the news front, a recent research report from Bank of America Securities pointed out that CHOW TAI FOOK's rating has been upgraded from "neutral" to "buy" because the company's focus on the domestic market is not directly affected by global tariffs. In addition, with same store sales bottoming out, the decline in CHOW TAI FOOK's same store sales has narrowed and may further improve in the coming quarters; the valuation requirements are not high, a 6% dividend yield can provide support for the stock price's downside, and a successful transformation can provide a basis for repricing. Bank of America Securities has raised CHOW TAI FOOK's target price from 7.3 Hong Kong dollars to 11.9 Hong Kong dollars to reflect the rebound in same store sales bottoming out and the potential brand turnaround. In addition, Goldman Sachs reports that CHOW TAI FOOK's same store sales (SSS) improved in the first quarter of 2025, although pressure from store closures remains. Although CHOW TAI FOOK will also suffer hedging losses from gold loans, the losses can be offset by expanding the gross margin of non-hedged gold products and increasing the fixed price gold portfolio. Goldman Sachs expects gross profit and operating profit margins to be higher than previous guidance, but net profit performance may be in line with expectations.