Jingu Financial News | Guosheng Securities issued a research report stating that Chow Tai Fook (01929) is expected to have a 18%~22% year-on-year decrease in revenue from April to September 2024, and a 42%~46% year-on-year decrease in net income. Excluding the impact of revaluation of gold borrowing, the net income is expected to decrease by 12%~16% year-on-year. The fluctuation in end demand has negatively affected the company's revenue. However, benefited from the optimization of product structure and the improvement in cost and expense control efficiency, the profit margin is still expected to improve year-on-year after adjustment.

The bank indicated that the short-term fluctuations in consumer environment and the high price of gold have negatively affected residents' jewelry consumption to a certain extent. However, according to the bank's tracking, since October, with the marginal improvement in the consumption environment, the decline in the company's terminal sales in the fourth quarter may be narrower compared to July-September. At the same time, facing the high trend of gold prices, the company continues to promote the sales of high gross margin priced products. Overall, the bank expects the revenue decline in the second half of the year to be narrower than the first half of the fiscal year, benefiting from the optimization of product structure and the increase in gold price, the profit margin for the whole year is expected to improve year-on-year.

The bank further mentioned that as a leader in the jewelry industry, the company focuses on single-store operation on the channel end, optimizes product design on the product end, and attaches importance to consumer reach. The bank adjusted the company's FY2025-2027 net income attributable to the parent expectations to 5.844/6.337/6.913 billion Hong Kong dollars, corresponding to FY2025 PE of 13 times, and maintains a 'buy' rating.