The company released the 2024 fiscal year results announcement and operating data for April to April 2024. FY24 achieved turnover of HK$108.713 billion, +14.82% YoY; net profit to mother of HK$6.499 billion, +20.71% YoY.
There was a net increase of 143 stores during the fiscal year, of which 21 new self-operated and franchised stores were added, respectively. In April to April 2024, the company's revenue was -20.2% year-on-year, and gold terminal sales were under pressure due to high fluctuations in gold prices.
The company currently focuses on improving the quality of operations, has strong certainty about long-term growth, and maintains a “highly recommended” rating.
The company announced financial results for the 2024 fiscal year. FY2024 achieved turnover of HK$108.713 billion, +14.82% YoY; net profit to mother of HK$6.499 billion, +20.71% YoY. The 2024 fiscal year plan is to pay a dividend of HK$0.55 per share for the full year, with a dividend payout ratio of 84.6% for the full year.
(1) By region: Revenue from Hong Kong, Macao and other regions benefited from the recovery of inbound tourism and achieved a relatively rapid growth rate. FY24's revenue in mainland China was HK$89.698 billion, +9.9% year over year; revenue from Hong Kong, Macau and other regions was HK$19.015 billion, +45.6% year over year, mainly benefiting from the continued recovery of inbound tourism.
(2) Channel division: The rise in revenue from new store openings drives faster revenue growth in franchise channels. The FY24 direct channel achieved revenue of HK$54.819 billion, +12.3% year-on-year; the franchise channel achieved revenue of HK$53.894 billion, +17.4% year-on-year. Among them, retail/franchise sales in mainland China were HK$385.70/ $51,128 billion, respectively, or +3.6%/+15.1% year-on-year. In terms of same stores, FY24 sales of direct-managed/franchised stores in mainland China were +1.8%/+7.4% year-on-year respectively, mainly driven by rising revenue from newly opened franchise stores.
(3) By product: Sales demand for gold products is strong, and inlay continues to decline. FY24 gold products achieved revenue of HK$88.361 billion, +22.5% year over year, accounting for 82.0% (+5.1pct) of total revenue; revenue of mosaic products was HK$14.439 billion, -13.3% year over year.
The pace of store expansion is slowing down, and the focus is on improving the quality of individual stores. By the end of the FY24 period, there were 7,403 retail stores of Chow Tai ?$#@$ jewellery in mainland China, with a net increase of 143 stores during the fiscal year, including 21 or 122 new self-operated and franchised stores, respectively; the net increase of 2 stores in Hong Kong and Macau reached 87, and a net increase of 8 to 58 stores in other markets.
The cost control effect is good, and profitability is steadily improving. (1) FY24's adjusted gross profit margin was 22.8%, -0.9 pct year over year, mainly due to changes in product and channel structure. Among them, the increase in gross margin brought about by rising gold prices and optimized pricing strategies offset some of the decline due to the above reasons. (2) FY24's sales and administrative expenses accounted for -2.3 pct to 12.2% of revenue (SG&A), sales expenses ratio -1.8 pct to 8.7% year over year; management expenses ratio -0.5 pct to 3.5% year over year, and the cost control results were good. (3) Under the combined influence, FY24's net interest rate was +0.3 pct to 6.1% year-on-year.
Cash flow is abundant, and inventory turnover is speeding up. FY24's net cash flow from operating activities was HK$13.84 billion, +37.5% year over year, with abundant cash flow. FY24's inventory turnover period was 274 days, down 20 days from year on year, and the turnover rate accelerated.
The company also released the main operating data for April to April 2024. Recently, gold terminal consumption was under pressure, and revenue declined year-on-year. From April 1 to May 31, 2024, the company's revenue was -20.2% YoY, with Mainland China revenue -18.8% YoY, Hong Kong, Macao and other regions -29.0% YoY. Looking at the same stores, the sales volume of the same store in mainland China, Hong Kong, Macau and other regions was -27.6%/-32.0%, and the sales volume was -39.7%/-37.3% respectively. Further according to product classification, the same store for gold/inlay products in mainland China was -29.8%/-32.9%, while the same store for gold/inlay products in Hong Kong and Macau was -34.6%/-31.1%. Affected by high fluctuations in gold prices, terminal sales of gold products came under pressure in April-May, and mosaic products continued to decline.
Investment advice: The company is a leading brand in the gold and jewelry industry. It has advantages in brand power, product power and channel level. Currently, it focuses on improving business quality, and long-term growth can be expected. The company's net profit for FY2025-FY2027 is estimated to be 7.26 billion yuan, 8.19 billion HK$9.19 billion, with year-on-year growth rates of 12%, 13%, and 12% respectively, corresponding to FY25PE12.0X, FY26PE10.7X, and FY27PE9.5X, maintaining a “highly recommended” rating.
Risk warning: the risk of macroeconomic environment fluctuations, the risk of gold price fluctuations, the risk of a further decline in terminal consumer demand, the risk of offline channel expansion falling short of expectations, and the risk of increased corporate competition.