Yamato: CHOW TAI FOOK (01929) target price raised to HK$17, reiterated "buy" rating.

Yamato issued a research report stating that after meeting with the management of CHOW TAI FOOK (01929), they received the latest information. Although there have been recent fluctuations in the price of gold, the basic demand for gold jewelry from consumers remains strong. The management's comments are generally consistent with their peers, believing that consumers are more inclined to accelerate purchases when the price of gold rises, rather than waiting for prices to fall. Their target price has been raised from HK$15.5 to HK$17, and they have reiterated a "buy" rating. It has been reported that CHOW TAI FOOK plans to raise the prices of gold jewelry after the Lunar New Year, with the group confirming the price increase, although the timing and extent have not been determined yet. The manager of CHOW TAI FOOK stores revealed to Yamato that the increase will be at least 15%. Yamato believes that this roughly aligns with the industry's expectations for price adjustments after the holidays. As Valentine's Day falls on a Saturday before a long holiday weekend this year, unlike 2024 when it coincided with the Chinese New Year, the bank expects this to further boost the demand for gifts and foot traffic in stores. Furthermore, Yamato believes that CHOW TAI FOOK's brand upgrade plan over the years continues to make progress, with the opening of the Guangdong Daxin flagship store today (11th), which is the company's largest store in Hong Kong. At the same time, the flagship store at Shanghai K11 Shopping Art Center is also in preparation. Yamato has raised their earnings forecast for CHOW TAI FOOK for the 2027 fiscal year by 6%, mainly considering the strengthening of sales in Hong Kong/Macau due to the widening retail price gap and the sustained strength of gold prices.