Event: (1) The company announced its annual results for the year ended March 31, 2024: FY24 achieved operating income of HK$108.713 billion, +14.8% year over year; realized net profit to mother of HK$6.499 billion, +20.7% year over year. (2) The company released operating data for April to May 2024: retail value in mainland China -18.8% year-on-year, same-store sales -27.6%; retail value in Hong Kong, China, Macau and other markets -29.0% YoY, same-store sales -32.0%; Group retail value -20.2% YoY.
Regionally, Hong Kong, Macao and other markets benefit from the resumption of tourism growth leading the mainland. FY24 Mainland revenue was HK$89.698 billion, +9.9% year on year, +14.1% at the same exchange rate, of which retail and wholesale businesses were +3.6%/+15.1%, respectively; revenue from Hong Kong, Macau and other markets was HK$19.015 billion, +45.6% year over year.
In terms of same-store caliber, mainland same-store sales were +1.8% year-on-year, and Hong Kong, Macao and other regions were +42.4% year-on-year. The mainland's growth rate changed from negative to positive compared to FY23, and the Hong Kong and Macao regions achieved a further increase.
In terms of channels, the company is slowing down store opening and optimizing store management. By the end of March 2024, the company's Chow Tai ?$#@$ jewellery retail network had expanded to 7,548, including 7403/87/58 Chow Tai ?$#@$ jewellery retail outlets in the Mainland, Hong Kong and Macau/other markets respectively, with a net increase of 143/2/8 for the whole year.
In terms of profit, the share of gold products and wholesale business increased, offsetting the favorable impact of rising gold prices and the company's optimized pricing strategy, weakening the overall gross margin trend. FY24's adjusted gross margin for the full year reached 22.8%, -0.9pct year on year.
On the brand side, change the brand logo and create a new image store to enhance brand power. In April 2024, the company launched a new brand logo to all consumers, showing the brand's heritage with a stylish and vibrant design. At the same time, two brand-new image stores in Hong Kong and Shanghai will also open in 24-25.
Investment advice: High-priced terminals have a heavy wait-and-see attitude. I expect the company's same-store data to improve. We lowered the company's FY25-26 forecast to achieve revenue of HK$1157.3/124.94 billion, net profit to mother of HK$7.4/8.70 billion, and added the FY27 forecast. It is estimated to achieve revenue/net profit of HK$1350.9/10.25 billion. The current stock price corresponds to PE of 11.6/9.9/8.4 times, maintaining the “increase” rating.
Risk warning: industry competition intensifies; gold prices fluctuate sharply; consumption recovery falls short of expectations