GF Securities has given Chow Tai Fook a "buy" rating with a fair value of 19.99 Hong Kong dollars.

GF SEC released a research report stating that Chow Tai Fook (01929) is expected to achieve a net profit attributable to shareholders of 7.99 billion, 9.026 billion, and 9.818 billion Hong Kong dollars in the fiscal years 2026-2028, with year-on-year growth rates of 35.0%, 13.0%, and 8.8% respectively. Referring to the valuation of comparable companies, a P/E ratio of 25x is given for the fiscal year 2026, corresponding to a fair value of 19.99 Hong Kong dollars per share, and a "buy" rating is given. GF SEC's main points are as follows: Event: The company reported its mid-term performance for FY26 (April 1, 2025 - September 30, 2025), with revenues of 38.99 billion Hong Kong dollars, a decrease of 1.1% year-on-year; operating profit of 6.82 billion Hong Kong dollars, an increase of 0.7% year-on-year; operating profit margin increased by 0.3 percentage points to 17.5% year-on-year; net profit attributable to shareholders was 2.56 billion Hong Kong dollars, basically flat year-on-year. The company announced a interim dividend of 0.22 Hong Kong dollars per share, with a dividend payout ratio of 85.7%, continuing to provide high dividend returns to shareholders; in terms of same-store sales, mainland China's same-store sales increased by 2.6% year-on-year, while Hong Kong, Macau, and other regions' same-store sales increased by 4.4% year-on-year. Strong performance in sales of priced jewelry supports strong profitability In FY26H1, mainland China's same-store sales of priced jewelry increased by 8.3% year-on-year, while the price of gold increased by 3.1% year-on-year; same-store sales of priced jewelry in Hong Kong, Macau, and other markets increased by 6.1% year-on-year, with the price of gold increasing by 8.5% year-on-year. In terms of prices, the average price of priced gold/gold used in the store increased significantly, while the average price of embedded jewelry remained relatively stable. Thanks to the high growth in iconic products, the retail sales of priced jewelry in the first half of the fiscal year increased by 9.3% year-on-year, with revenue accounting for 27.4% increasing to 31.8%, supporting the gross profit margin to be maintained at around 30.5%. Continued optimization of store network, improving store efficiency is the core focus As of FY26H1, the company had 6,041 stores, with a net decrease of 603 stores compared to the beginning of the period. The company continues to eliminate inefficient stores and layout high-efficiency flagship stores. The monthly sales of new stores in FY26H1 can reach 1.3 million Hong Kong dollars, a 72% increase year-on-year from FY25H1. Since October, the company's terminal has maintained a high growth momentum, with retail sales increasing by 33.9% year-on-year from October 1 to November 18, showing a significant acceleration compared to the 4.1% growth from July to September. In terms of same-store sales, mainland China's same-store sales increased by 38.8% year-on-year, with the same-store sales of priced/gold used jewelry increasing by 93.9%/23.0% respectively.