Citigroup: CHOW TAI FOOK (01929) performance below expectations, lowering target price to HK$15.4.

Citigroup released a research report stating that for the fiscal year 2027 to 2028, CHOW TAI FOOK (01929) pure profit forecast has been raised by 8% to 9%, mainly due to an increase in revenue forecast by 3% to 7% and an upward revision of net profit margin forecast. The "buy" rating is maintained, with the target price lowered from HK$16.7 to HK$15.4, corresponding to a forecast PE of 15 times for the fiscal year 2027. CHOW TAI FOOK's performance for the fiscal year ending March met expectations, with a year-on-year increase in net profit of 52% to HK$9 billion. Management's guidance for sales and profit margins for the fiscal year ending March 2027 both exceeded expectations. From April to May this year, mainland China same-store sales rebounded by 20%, while Hong Kong, Macau, and overseas same-store sales increased by 41%, reflecting a recovery in demand for pure gold jewelry following a decline in gold prices. As of March this year, CHOW TAI FOOK has 8 high-end flagship stores with a productivity of 8 to 10 times that of average stores, a 57% increase from the 2026 fiscal year. The productivity of renovated stores also increased by 15%. The group plans to open more high-end and self-operated stores in the fiscal year 2027, accounting for over 50% of new stores, with a significant reduction in the expected number of closures.