Golden Horse Financial News | HTSC issued a research report, stating that Chow Tai Fook (01929) announced its interim performance (April to September 2024): FY25H1 revenue of 39.41 billion Hong Kong dollars, -20.4% year-on-year; operating profit of 6.78 billion Hong Kong dollars, +4.0% year-on-year; operating profit margin increased by +4 percentage points to 17.2% year-on-year; net income of 2.53 billion Hong Kong dollars, -44.4% year-on-year, mainly due to significant fluctuations in gold prices resulting in a loss of 3.065 billion Hong Kong dollars in the company's gold loans. The company announced an interim dividend of 0.2 Hong Kong dollars per share and plans to repurchase up to 2 billion Hong Kong dollars of shares, demonstrating confidence in the company's long-term development. The bank pointed out that the high volatility of gold prices affected sales performance, with the proportion of fixed-price products increasing to help improve gross margin. In addition, boosted by the November 11 shopping festival and new product launches, sales have shown a narrowing decline since October.

The bank maintains the FY25-FY27 net income attributable to the parent company at 5.69, 6.15, and 6.56 billion Hong Kong dollars, with corresponding year-on-year changes of -12.4%, +8.0%, +6.7%, and corresponding EPS of 0.57, 0.61, 0.66 Hong Kong dollars. Referring to the 25-year Wind consensus PE average of comparable companies at 11 times, considering that Chow Tai Fook, as a leader, is expected to fully benefit from the increased concentration in the industry competition after this round of intensification, giving the company a PE of 15 times FY25 (previously 18 times FY25, based on comparable companies at 13 times PE), with a target price of 8.5 Hong Kong dollars (previously 10.26 Hong Kong dollars). Maintain a 'shareholding' rating.