Dah Sing Credit Rating | BOC International: Raise Chow Tai Fook's target price to 13.8 Hong Kong dollars, dividends are attractive.

The Bank of China International research report indicates that Chow Tai Fook's net profit for the 2025 fiscal year is expected to decrease by 9% compared to the previous year, but it is still 7% higher than market expectations, reflecting the positive contribution of strong gold prices to its gross profit margin. The group's recent same-store sales have improved, reflecting consumers' increased willingness to purchase gold in the current cycle, as well as the success of the group's strategy, including offering more fixed-price gold products and focusing on sales efficiency in stores. The bank expects the group's sales to gradually recover in the 2026 fiscal year. The report also notes that although the group's performance is still affected by fluctuations in gold prices and potential hedge profits or losses, according to management's expectations, the impact will be less than in the 2025 fiscal year. Additionally, the bank believes that its dividend is attractive and maintains a "buy" rating, raising the target price from HK$11.2 to HK$13.8.