According to Zhitong Finance APP, Kuyuan Securities has released a research report maintaining a "buy" rating for chow tai fook (01929). Considering factors such as fluctuations in gold prices and a sluggish consumer environment, it has lowered the company's earnings forecast for fiscal years 2025-2027, expecting net income to be 5.793/6.381/7.034 billion yuan, corresponding to EPS of 0.58/0.64/0.70 Hong Kong dollars. The bank believes the company focuses on overall operation quality improvement and optimizing channels, and is about to reach an important milestone as its brand celebrates its centenary, with five strategic guidelines likely to support healthy and steady development, making the valuation reasonable.

The company released its semi-annual report: For FY2025H1, it achieved revenue of 39.408 billion Hong Kong dollars (-20.4%) and net income of 2.53 billion Hong Kong dollars (-44.4%); additionally, the board of directors declared an interim dividend of 0.20 Hong Kong dollars per share.

The major viewpoints of Open source Securities are as follows:

Fluctuations in high gold prices suppressed sales, leading to pressure on same-store performance in mainland china, with disclosure scope changes affecting the apparent gross margin.

By region, in FY2025H1, the company achieved a year-on-year revenue decline of -18.8%/-27.9% in mainland china and outside of mainland china respectively; of which, revenue from mainland china accounted for 83.8% (+1.7 pct). By product, in FY2025H1, the company's revenue from jewelry embedding, platinum and K gold jewelry/gold jewelry and products/watches saw year-on-year declines of -20.0%/-21.6%/-12.5%.

In terms of same-store sales, the company's same-store sales in mainland china for FY2025H1 declined by -25.4%. Regarding profitability, the company's gross margin for FY2025H1 was 31.4% (+6.5 pct), mainly benefiting from rising gold prices and an increased contribution from priced gold products. Additionally, the reclassification of the impact of gold lending from sales costs to other profits and losses also contributed to certain effects; overall, fluctuations in gold prices had a positive contribution of 9.8 pct to the gross margin. The sales/management expense ratios were 10.6%/4.6%, which were up by +1.7 pct/+1.0 pct year-on-year.

Continuously optimize channel quality, actively promote brand transformation to enhance product capability, and pricing products show remarkable performance.

(1) Channels: The company continuously optimizes store quality and efficiency, in mainland china, for FY2025H1, chow tai fook's main brand net closures total 239 stores, with the total number of stores reaching 6,968 by the end of the period, of which direct-operated/franchised account for 23.3%/76.7%, respectively. (2) Products: The company actively promotes brand transformation and optimizes products. The chow tai fook Chuanfu series launched in April 2024 achieved a retail value of over 1.5 billion Hong Kong dollars in the first half of the 2025 fiscal year; pricing gold products achieved counter-cyclical growth, with their retail value contribution to mainland china's gold jewelry and product categories growing by 100% year-on-year.

Risk warning: Significant fluctuations in gold prices; new product launches may not meet expectations; store adjustments may not meet expectations.