受双11 大促及新品拉动，10 月以来销售降幅环比收窄公司发布2024 年10 月1 日至11 月18 日（3QTD）经营数据，期内零售值同比-15%，降幅环比7-9 月（-21%）有所收窄，我们认为主要受双11大促和公司传福系列、故宫系列等新品拉动。分地区看，3QTD 中国内地/港澳零售值同比-14.2%/-20.0%；分产品看，内地黄金首饰及产品/珠宝镶嵌、铂金及K 金首饰SSSG 分别-19.6%/-17.7%，港澳地区同比-33.2%/+45.1%。Chow Tai ?$#@$ announced interim results (April to September 2024): FY25H1 revenue of HK$39.41 billion, -20.4%; operating profit of HK$6.78 billion, +4.0% year over year; operating profit margin +4pct to 17.2% year over year; net profit of HK$2.53 billion, 44.4% year over year, mainly due to large fluctuations in gold prices. The company announced an interim dividend of HK$0.2 per share and plans to use up to HK$2 billion to repurchase shares, demonstrating the company's confidence in long-term development. Maintain an “Overweight” rating.
High fluctuations in gold prices affected sales performance. The increase in the share of one-price products boosted gross margin improvement in FY25H1 Mainland China/Hong Kong and Macau SSSG (year-on-year growth rate of same-store sales), respectively, and -26.4%/-29.8% for gold jewellery and products/jewellery, platinum and K gold jewellery SSSG respectively.
The high rise in gold prices affected the company's overall sales performance, but the company continued to optimize its pricing strategy and product portfolio. The retail value of the Chow Tai ?$#@$ Chuanfu series, which was launched in April, was outstanding, driving revenue of one-price products +117.9% year over year, accounting for an increase of 7.6pct to 12%; revenue from gram-heavy products was -29.7% YoY, a decrease of 8.3 pct to 67.4%. The rapid rise in gold prices combined with an increase in the share of high-margin single-price products helped increase gross margin by 6.5 pct to 31.4% year over year.
Driven by the Double 11 promotion and new products, the decline in sales has narrowed month-on-month since October 1, 2024 (3QTD). The retail value for the period was -15% year-on-year, and the decline narrowed from July-September (-21%). We believe it was mainly driven by the Double 11 promotion and new products such as the Forbidden City series. By region, the retail value of 3QTD Mainland China/Hong Kong and Macau was -14.2%/-20.0%; by product, mainland gold jewellery and products/jewellery settings, platinum and K-gold jewellery SSSG were -19.6%/-17.7% respectively, while Hong Kong and Macau regions were -33.2%/+45.1% year-on-year.
Optimize the store network and update channels to help stores improve profit quality. In order to cope with fluctuations in the macro environment and fierce industry competition, the company actively optimizes the channel network and is committed to improving the financial health of stores to achieve high-quality profits. FY25H1 closed a net of 239 stores. By the end of the period, the company had 6968/145 stores in the Mainland, Hong Kong, Macau and other regions; considering the current market environment and development trends, the company expects store closures to slow down in the second half of the fiscal year.
Profit forecasting and valuation
We maintained FY25-FY27 net profit of HK$5.69, 6.15, and 6.56 billion, with year-on-year differences of -12.4%, +8.0%, and +6.7%, respectively. The corresponding EPS was HK$0.57, 0.61, and 0.66. Referring to the 25-year Wind of comparable companies, the average PE value is 11 times. Considering that Chow Tai ?$#@$ is expected to fully benefit from the increase in concentration after intensifying competition in the current round of industry competition, the company was given FY25 15 times PE (previous value was FY25 18 times PE, based on comparable companies 13 times PE), corresponding to a target price of 8.5 HKD (previous value of HK$10.26).
Risk warning: Gold price fluctuations, company store adjustments, and consumer confidence recovery falls short of expectations.
