CHOW TAI FOOK JEWELLERY(1929.HK):WAIT FOR A TURNAROUND AFTER DOUBLE WHAMMY:D/G TO HOLD
CHOW TAI FOOK JEWELLERY(1929.HK):WAIT FOR A TURNAROUND AFTER DOUBLE WHAMMY:D/G TO HOLD
We believe the market is disappointed at CTF's performance, as FY24 earnings were 14% below our estimates. Even unrealised loss on gold loans is excluded, the earnings and recent performance reflect a much weaker sales momentum in both mainland China and Hong Kong and Macau since 2024. We believe FY25 earnings may see challenges on few aspects: (i) a high base of FY24 due to pent-up demand; (ii) the overhang of Fed rate cuts and its impact on gold price; (iii) weak consumer sentiment, and (iv) CTF's own strategic transformation, especially on store opening. Hence, we believe a macro-driven turnaround is needed. Still, considering its generous dividend payout, we believe the downside risk would be limited after the recent share price correction. Downgrade to HOLD.
我們認爲市場對CTF的表現感到失望，因爲FY24的收益比我們的預期低14%。即使排除黃金貸款的未實現損失，收益和最近的表現也反映出自2024年以來，在中國內地和香港澳門地區的銷售勢頭顯着減弱。我們認爲FY25的收益可能會在以下幾個方面面臨挑戰：(i)基於FY24的高基數，因爲需求積壓; (ii)聯邦利率削減的懸垂和其對黃金價格的影響; (iii)消費者情緒疲軟，以及(iv) CTF自身的戰略轉型，尤其是店鋪開設方面。因此，我們認爲需要進行驅動宏觀的轉變。儘管如此，考慮到其慷慨的紅利支付，我們認爲近期股價已經有所回調，下行風險將被限制。降級爲持有。
Key Factors for Rating
評級的關鍵因素
FY24 earnings a miss due to unrealised loss. Despite a rather resilient top-line (FY24 revenue +15% YoY; 2HFY24 +23% YoY), CTF's FY24 NP of HK$6,499m is 14% below our estimates. A key issue is the unrealised loss on gold loans of HK$2,489m, a mark-to-market accounting item related to CTF's gold hedging. It dragged reported GPM by 441bps to 16.8%. Excluding this, CTF's core operating profit was up 29% YoY to HK$12,163m, largely in-line and not bad in our view.
FY24的收益錯失機會，由於未實現的損失。儘管收入相對穩健(FY24年收入+15%，YoY;2HY24年+23%YoY), CTF 的FY24年淨牌數量爲6,499百萬港元，低於我們的估計14%。一個關鍵問題是黃金貸款的未實現損失爲2,489百萬港元，這是與CTF的黃金對沖相關的市場價值的會計項目。這使得報告的GPM下降441bps至16.8%。除此之外，CTF的核心營業利潤年同比增長29%，達到12163百萬元，基本符合我們的預期。
A very weak start for FY25. For Apr-May 2024, CTF's group retail sales value declined by 20%, with mainland China/HK& Macau segment declined by 19%/29% respectively. For same-store sales growth (SSSG), both region recorded -28%/-32%. Despite a high base in 2023, we believe this is much weaker than what the market expected, reflecting weak consumer sentiment. Mgmt. attributed it to high and staggering gold price, and expected it could take 1 or 2 quarters for the sentiment to recover. Hence, mgmt. expected SSSG for the full year of FY25 may record a mid-SD decline.
FY25年開始非常疲弱。2024年4月至5月，CTF的零售銷售額下降了20%，其中，中國內地、香港和澳門地區的銷售額下降了19%和29%。對於同店銷售增長(SSSG)，兩個地區的數字分別下降了28%/-32%。儘管2023年基數較高，我們認爲這比市場預期的要差得多，反映出消費者信心疲軟。管理層認爲這是由於黃金價格高企不斷攀升導致的，並預計需要1到2個季度才能恢復信心。因此，管理層預計FY25的同店銷售增長率可能會錄得中期收益下降。
More complications unfolded under weak momentum. With regard to the HK$2,489m unrealised loss recorded in FY24, we believe it is not that concerning if sales momentum were good in FY25 as this could translate into good GPM when gold products are sold. Yet, we believe now it could take longer time to digest after weak 1QFY25. On top of that, operating deleverage could arise, at least in 1HFY25 when CTF maintains branding efforts and spending.
隨着業務的弱勢發展，出現了更多的複雜性。就FY24所記錄的2,489百萬港元的未實現損失而言，如果FY25年的銷售勢頭良好，則此損失並不令人擔憂，因爲在黃金產品銷售時，可以轉化爲良好的GPM。然而，我們認爲現在在1QFY25之後需要更長時間的消化。此外，在CTF維持品牌推廣和支出的情況下，可能會出現營運槓桿作用。
Wait for a turnaround in 2HFY25 as visibility fades. CTF also provides no guidance on its store expansion, emphasising the need of opening larger stores to lift store productivity. Hence, even CTF targets to achieve 100-200bps of organic GPM expansion, we believe the earnings visibility would be very limited in FY25, and its turnaround would largely depend on macro such as gold price.
隨着能見度的逐漸消失，等待2HFY25的轉變。CTF在店鋪擴張上並未提供任何指引，強調需要開設更大的店鋪以提高門店生產力。因此，即使CTF的目標是實現100-200 bps的有機GPM擴張，我們認爲FY25年的收益能見度將非常有限，而它的轉變主要取決於宏觀因素，如黃金價格。
Key Risks for Rating
評級的主要風險
Key downside risks: (i) keen competition among retailers resulting in higher retail discount; (ii) slower store expansion; and (iii) volatility in gold price leading to unexpected hedging losses.
關鍵下行風險：(i)零售商之間的激烈競爭導致銷售折扣率提高；(ii)門店擴張減緩；(iii)黃金價格的波動導致無法預期的對沖損失。
Key upside risks: (i) much stronger same store sales with CTF's branding effort; (ii) strong store expansion; and (iii) unexpected hedging gains or strong GPM due to gold price movement.
關鍵上行風險：(i) CTF在品牌推廣方面實現更強勁的同店銷售增長；(ii)強勁的店鋪擴張；(iii)出乎意料的對沖收益或因黃金價格波動而產生的強勁GPM。
Valuation
估值
We cut our FY25 and FY26 EPS by 18%/16% to mainly factor: (i) weak sales momentum, as reflected by Apr-May 2024 SSSG figures, and (ii) slower store expansion for FY25-26. We now expect CTF to have a net addition of 45 stores in FY25, a much slower pace compared to FY23 (+1,574 stores) and FY24 (+136 stores)
我們將FY25和 FY26 的EPS下調了18%/16%，以主要考慮到(i)2024年4月至5月的同店銷售增長數據表明的銷售勢頭疲軟，以及(ii)FY25-FY26期間門店擴張速度放緩。我們現在預計，CTF在FY25年將淨增加45家門店，比FY23年(+1,574家門店)和FY24年(+136家門店)明顯放緩。
Downgrade to HOLD on disappointing industry performance and CTF's limited earnings visibility. Our TP is lowered to HK$8.4, based on 12x FY25 P/E (previous: 18x). We apply a lower multiple as we believe a de-rating would occur given a much slower earnings growth (BOCIe: FY25-26: +8%/+9%). We believe CTF still deserves to be traded at a premium over peers, and hence we applied a PEG ratio of 1.5x when peers in retail segment may be traded at 1x PEG or below.
由於CTF業績限制的不確定性和有限能見度，我們將其下調至維持持有。我們的目標價爲每股港元8.4元，基於FY25 P/E 12倍(之前爲18倍)。我們使用較低的倍數，因爲我們認爲因較慢的收益增長(BOCIe:FY25-26: +8%/+9%)，它可能會發生衝擊。我們認爲CTF仍然應該在同行業內以溢價交易，因此我們將PEG比率定爲1.5倍，而同行股票在1倍PEG以下。
Nonetheless, we expect CTF would maintain a generous dividend payout to make its DPS to be at least HK$0.55, and this could limit its downside of share price.
儘管如此，我們預計CTF將保持慷慨的股息支付，使每股派息至少爲0.55港元，這可能限制其股價下行。
譯文內容由第三人軟體翻譯。