The company released its FY24 annual report
FY24's annual revenue was HK$108.7 billion, up 15%, and 19% after excluding exchange rate factors; net profit to mother was HK$6.5 billion, up 21%.
By region, FY24's mainland revenue was HK$89.7 billion, up 9.9% (83% of total); Hong Kong, Macau and other revenue was HK$19 billion, up 46% (17% of total); by product, FY24 gold revenue also increased by 22.5% (accounting for 82% of total); and mosaic revenue decreased by 13.3% (13.4% of total).
By channel (Mainland), FY24's wholesale revenue also increased by 15.1% (47% of the total); retail sales also increased by 3.6% (35.5% of the total). Among them, e-commerce volume and price increased by 18.8%, with an average price of HK$2,080 and an increase of HK$210, contributing 4.8% to total retail sales value and 11.6% to total retail sales volume.
Gross margin and expense ratio: FY24's annual gross profit margin was 22.8%, down 0.9 pct. Among them, gross margin optimization of each product in the retail business led to an increase of 1.4 pct, but changes in product mix led to a decrease of 1.5 pct; OPM was 11.2%, with the same increase of 1.2 pct in the Mainland, and 3.7 pct in Hong Kong and Macao; SG&A ratio of 12.2%, a decrease of 2.3 pct.
Retail outlets: As of 240331, there were 7,403 retail outlets in mainland China (same increase of 143), of which 5,678 were franchise stores, the same increase of 122, and the retail value of franchised stores increased by 23.4% (accounting for 70% of the total); there were 1,725 direct-run stores, an increase of 21, and the retail value of direct-run stores also increased by 5.8% (30% of the total).
Same-store sales: same-store sales in mainland China increased by 1.8%, same-store sales decreased by 4.8%; same-store sales of franchisees in mainland China also increased by 7.4%, and same-store sales decreased by 4.2%. By product, same-store sales of gold increased by 6.4%, same-store sales decreased by 0.6%, average price of HK$5,600; inlay same-store sales decreased by 14.4%, same-store sales decreased by 20.5%, average price of HK$8,100; Hong Kong, Macau and other same-store sales increased by 42.4%, same-store sales increased by 32%, and same-store sales by product increased 67.7%, same-store sales increased by 43%, average price of HK$8100; same-store sales decreased 4.8%, same store sales volume decreased 4.8% Average price is HK$16,700.
Retail value decreased by 20% in April-April 2024, including retail value in the Mainland decreased by 19% (88% of total), while retail value in Hong Kong, Macau and others decreased by 29% (12% of total);
Same-store sales: Mainland same-store sales decreased by 28%, same-store sales decreased by 40%, Hong Kong and Macau same-store sales decreased by 32%, and same-store sales decreased by 37%. By product, same-store sales of gold products in Hong Kong and Macau decreased by 35%, while same-store sales of mosaic products also decreased by 31%.
Adjust profit expectations and maintain a “buy” rating
The company embarked on a transformation journey in April '24: launching a new brand logo for consumers, a brand website, and the iconic Chow Tai ?$#@$ Chuanfu series. The brand transformation progressed steadily and maintained the growth trend.
Considering the pressure on terminal demand due to high gold price fluctuations, we expect FY25-27 revenue to be HK$115.7 billion, HK$124 billion, and HK$133 billion (prior FY25-26 value was HK$126.2 billion and HK$146.3 billion), and net profit to mother would be HK$7 billion, HK$7.8 billion, and HK$8.7 billion (FY25-26 prior value was HK$8.8 billion and HK$10 billion), and EPS would be HK$0.70, HK$0.78, and HK$0.87, respectively (FY25-26 previous value 0.88) HKD, HKD 1.00), corresponding PE is 12, 11, and 10X, respectively.
Risk warning: store expansion falls short of expectations, new store sales fall short of expectations, risk of gold price fluctuations, etc.