Jin Wu Financial News | Chao Yin International stated that Chow Tai Fook (01929) announced its first-half results, with revenue declining by 20.4% year-on-year, in line with market expectations. Net income decreased by 44.4% year-on-year, 20% lower than consensus expectations, primarily due to weak consumer sentiment and fair value losses on gold loans caused by rising gold prices. The company announced a share buyback plan worth 2 billion HKD in addition to a dividend of 0.2 HKD per share.

The company expects FY25E revenue to report a mid-double-digit decline, with the increase in gross margin being partially offset by the rise in SG&A expense ratio, leading to an operational profit margin increase of 1.5 to 3 percentage points. The bank has lowered its revenue forecast by 15% to 20%, expecting revenues for the fiscal years 2025/2026/2027 to change year-on-year by -16.2%, -2.4%, and +3.2%, respectively. Given the current uncertainties in the international environment that may lead to continued fluctuations in gold prices, the bank expects fair value losses on gold loans to persist in the second half. Therefore, the bank has reduced its net income forecast by 20% to 30%, expecting net income to change year-on-year by -23.2%, +28.1%, and +6.8%, reaching 5 billion HKD, 6.3 billion HKD, and 6.8 billion HKD, respectively, for the fiscal years 2025/2026/2027.

In light of the lowered net income expectations, the bank maintains a "buy" rating but adjusts the target price down by 31% to 10.0 HKD. The new target price corresponds to a 20 times expected PE for the fiscal year 2025, consistent with the long-term average level of comparable peers.