Net profit attributable to mother of FY2024 +20.7% YoY: FY2024 achieved revenue of HK$108.7 billion, of which revenue from mainland China was HK$89.7 billion, +9.9% year over year, and revenue from Hong Kong, Macao and other regions was HK$19 billion, +45.6% year over year; realized main operating profit of HK$12.16 billion, +28.9% YoY, with main operating profit of HK$10.51 billion and HK$1,654 billion respectively. /+153.7%; realized net profit of HK$6.5 billion to mother, +20.7% YoY. The annual dividend payout ratio reached 84.6%.
The gross margin declined due to the impact of the product structure, and operating efficiency improved markedly: FY2024 achieved an adjusted gross profit margin of 22.8%, a year-on-year decline of 0.9 pct, and an unrealized loss of HK$2.49 billion from gold loans brought about by the increase in the price of the main gold price of the adjusted project, leading to a negative change in gross margin of 2.3 pct. The overall decline in gross margin was mainly due to an increase in the share of heavy gold products. The main operating net interest rate was 11.2%, +1.2pct year-on-year, mainly due to the company reducing costs and increasing efficiency, reducing cost-side expenses, and improving operational efficiency.
Same-store sales in mainland China were +1.8% YoY, mainly due to the contribution of gold products: on the same store side, FY2024 Mainland China Direct Store Sales/Sales Volume +1.8% YoY, Franchise Same-Store Sales/Sales Volume +7.4%/-4.2% YoY, Hong Kong and Macau Same-store Sales +42.4% YoY, and Sales Volume +32% YoY. By product, FY2024 mainland China gold same-store sales grew by +6.4% year on year, and mosaic same-store sales grew -14.4% year over year.
The company continues to open high-quality stores, and the franchise channel is climbing the trend: by channel, FY2024's self-operated revenue in mainland China was +3.6% year-on-year, and wholesale revenue was +15.1%. By the end of March 2024, the number of Chow Tai ?$#@$ Jewellery stores in mainland China reached 7,403, a net year-on-year increase of 143, including a net increase of 21 directly managed stores and a net increase of 122 franchised stores. The net increase in stores mainly came from second-tier cities.
Affected by high gold price fluctuations in April-April 2024, terminal sales were weak: in April-April 2024, the Group's overall retail sales grew -20.2% year-on-year, with retail sales in mainland China -18.8% year-on-year, and retail sales in Hong Kong, Macao and other markets -29% year-on-year. In terms of the same store, the growth rate of the same store in mainland China/Hong Kong, Macau and other markets was -27.6%/-32%; in terms of product structure, the same store growth rate for gold products in mainland China was -29.8%, and the same-store ratio for mosaic products was -32.9%.
Profit forecast and investment rating: Considering that high fluctuations in gold prices put pressure on terminal consumption, we lowered the company's FY2025-FY2026 net profit from HK$87.4/99 billion to HK$73.1/8.98 billion. The estimated net profit for FY2027 is HK$10.7 billion. The latest closing price corresponding to FY2025-FY2027 PE is 13/11/9 times, maintaining the “buy” rating.
Risk warning: Same-store sales recovery falls short of expectations, risk of store adjustments, risk of large fluctuations in gold prices, weakening consumption, etc.