Considering the negative impact of high gold prices on sales, Chow Tai Fook (01929) has lowered its FY25/26 EPS forecast by 20% to HKD 0.70/0.78 and maintains its "outperform the industry" rating.
According to the report released by CICC, taking into account the negative impact of high gold prices on sales, Chow Tai Fook (01929) has lowered its FY25/26 EPS forecast by 20% to HKD 0.70/0.78 and maintains its "outperform the industry" rating. Considering the short-term sales pressure impact on valuation, the target price is lowered by 29% to HKD 10.76, corresponding to a PE ratio of 15/14 for FY25/26.
The report stated that since April, the high volatility of gold prices has affected consumer sentiment and the group's retail sales have decreased by 20% in April and May, including a 19% decrease in retail sales in Mainland China (self-operated/franchise stores decreased by 28%/19% in the same store), and a 29% decrease in retail sales in Hong Kong, Macau and other markets (Hong Kong and Macau stores decreased by 32% in the same store). The management plans to strengthen store operation and quality improvement, but due to the current volatility of gold prices, the revenue for FY25 is expected to remain stable or slightly increase.