Citi: Maintain Chow Tai Fook's (00659) “Buy” rating and reduce the target price to HK$10.3

The Zhitong Finance App learned that Citi released a research report saying that Chow Tai Fook Chuang (00659) is expected to announce the results for the 2026 fiscal year ending the end of June this year, which will be announced in late September. The bank expects the company's annual operating profit (AOP) to be roughly the same (up 1%) year on year, with an ordinary dividend of 60 HK cents per share, and a total ordinary dividend of 4% year on year. The target price was reduced from HK$10.9 to HK$10.3, maintaining the “buy” rating created by Chow Tai Fook (00659).

According to the bank, stock price performance has been weak since mid-May, or due to market concerns that the mainland's tightening of foreign investment will affect Hong Kong's insurance business. However, referring to the results of AIA (01299) and Prudential (02378) in the first half of this year, the bank believes that the short-term impact of State Council Order No. 837 on the business of mainland visitors is manageable. In terms of segments, the bank expects AOP for the road business to remain roughly flat; AOP for financial services is expected to rise 17%, driven by Chow Tai Fook Life's 16% year-on-year increase and uSMART's first-year contribution; while AOP in the logistics and construction business falls 11% and 12%, respectively. The total estimated AOP for the previous fiscal year was about HK$4.499 billion, roughly the same as the previous year. The bank only fine-tuned the overall AOP forecast for the 2026-28 fiscal year. Among them, the financial services AOP for the 2027-28 fiscal year was reduced by 5% to 7%, partially offset by other segments and the latest exchange expectations; it also lowered the profit forecast for the 2026-28 fiscal year by 3% to 5%.