Incident: The company released unaudited key operating data from January to March 2024, and the Group's overall retail value was +12.4% year-on-year. Among them, retail value in mainland China increased 12.4% year on year, same store sales -2.7% year on year; retail value in Hong Kong, China, Macau and other markets increased 12.8% year over year, and same store sales +4.5% year over year.
From a same-store perspective, Hong Kong, Macau and other markets benefited from the recovery in tourism and performed better than the mainland market. Affected by the high base of FY23's fourth quarter data, FY24 mainland same-store sales in the fourth quarter were -2.7% year-on-year, and sales volume was -6.9% year-on-year. On the other hand, looking at Hong Kong, Macau and other markets, the benefits of strong demand in the double quarter were compounded by continuously recovering travel data, which achieved same-store sales +4.5% YoY.
From a category perspective, the gold category continues to contribute more, and the adjustment of the inlay category is still ongoing. The retail value of gold products in the Mainland market was +18.8% YoY (sales contribution reached 84.8%), the average selling price increased from HK$5200 to HK$5,700, and retail value of mosaic products was -14.2% YoY (sales contribution reached 12.4%); the retail value of gold products in Hong Kong, Macao and other markets was +25.8% YoY, and retail value of mosaic products -24.3% YoY.
From a channel perspective, the company is slowing down store opening and optimizing store management. As of March 31, 2024, the company had 7,627 stores in mainland China, a net increase of 126 over the same period last year. There were 155 stores in Hong Kong, Macau and other markets, a year-on-year net opening of 10. The total number of stores during the quarter reached 7,782, a decrease of 94 compared to the third quarter.
From a product perspective, the company's explosions during the season were a success, and strong product strength increased customer stickiness. Q4Soinlove launched a koi lock bag, and the main brand, Chow Tai ?$#@$, launched the Pure Gold Sugar Cube series, which is loved by young consumers, showing the company's outstanding strength in product design and brand marketing.
As a leading gold and jewelry company, the company is optimistic about future performance growth brought about by the continued rise in single-store efficiency.
We expect the company's FY24-26 to achieve operating income of HK$1076.6/1186.1/HK$13.16 billion and net profit to mother of HK$75.0/88.4/10.12 billion. The current share price corresponds to PE of 15.1/12.8/11.2 times, maintaining the “gain” rating.
Risk warning: industry competition intensifies; gold prices fluctuate sharply; consumption recovery falls short of expectations