BOCI: CHOW TAI FOOK (01929) Benefits from Fair Value Gains on Gold Loans Driving Strong Profit Growth; Maintains "Buy" Rating

BOCI issued a research report stating that CHOW TAI FOOK (01929) is benefiting from fair value gains on gold loans driving strong profit growth. The bank maintains its "Buy" rating and target price of HK$14.8. BOCI noted that CHOW TAI FOOK's group retail sales value fell 0.5% year-on-year in the second quarter of FY2027, with mainland China down 5.3%, while Hong Kong, Macau and other markets rose 33.2%. The bank believes that amid a highly challenging retail environment, the company's sales performance still outperformed the industry and is actually not too bad. CHOW TAI FOOK also issued a positive profit alert, expecting net profit for the first half of the fiscal year to rise approximately 90% to 100% year-on-year, mainly driven by fair value gains on gold loans (compared with a loss in the same period last year) and improved sales in major markets. BOCI believes this reflects the company's adoption of a more balanced, all-weather operating strategy, and that its valuation has become more attractive.