CICC: Maintaining Chow Sang Sang (00116)'s “Outperform the Industry” rating target price of HK$18.51

The Zhitong Finance App learned that CICC released a research report stating that it will keep Chow Sang Sang (00116)'s 2026 and 2027 earnings forecasts unchanged, at HK$4.4 and HK$4.5 respectively, maintaining the “outperforming industry” rating and target price of HK$18.51, corresponding to 4 times the price-earnings ratio in 2026, with 37% upside compared to the current stock price. The bank believes that the company's same-store sales in mainland China have maintained positive growth in the context of industry pressure, showing operational resilience. Product portfolio optimization and core store upgrades are expected to enhance operational resilience.

CICC's main views are as follows:

The company's recent situation

In the third quarter of 2026, the retail sales value of Chow Sang Sang Sang Group increased 3% year-on-year. Among them, same-store sales in mainland China, Hong Kong and Macau increased 4% and 7%, respectively. By the end of the period, the company had 638 retail jewellery stores in mainland China and 62 in Hong Kong and Macau.

Same stores in mainland China have maintained positive growth, showing business resilience in the context of industry pressure

In July and August 2026, retail sales of gold and silver jewelry above the limit fell 10.1% and 17.5%, respectively, year-on-year, and terminal demand is still under pressure. In this context, the company's same-store sales in mainland China increased 4% year-on-year in the third quarter of 2026. Although it slowed down from 17% in the second quarter, it maintained positive growth, showing operational resilience compared to the industry.

At the same time, consumer demand for gold jewelry and products remains positive, and they continue to prefer to buy denominated gold jewelry. Iconic series such as “Cultural Blessing” and “Cool Black” contributed strongly. “YUYU” and “Charme” are still the core series of price-priced gold products, and high-end stores in major shopping locations have performed well. Online channels were affected by a higher base in the same period last year, and retail sales declined slightly during the quarter.

The growth rate of the same stores in Hong Kong and Macau in China has slowed, and Macau's performance is relatively outstanding

In the third quarter of 2026, the company's same-store sales in Hong Kong and Macau increased 7% year over year, down from 30% in the second quarter. Broad customer demand still supported sales. Among them, Macau, China showed particularly strong performance. The company continued to expand the Macau market, opening a third branch in The Venetian during the quarter, driving a net increase of 1 to 62 jewelry retail stores in Hong Kong and Macau compared to the end of last quarter.

Continue to optimize the retail network and focus on improving channel efficiency

The company continues to focus on store productivity, location quality, and brand experience. In mainland China, 6 new jewelry retail stores were opened during the season, and 39 to 638 were closed. At the same time, image upgrades were completed at Shanghai International Trade Plaza and Hangzhou Vientiane City stores, and the first “Chow Sang Sang” boutique was opened at Regent Boutique in Taipei, China. The bank believes that product portfolio optimization and core store upgrades are expected to enhance operational resilience.

Profit forecasting and valuation

The bank kept the company's 2026 and 2027 earnings per share forecasts unchanged at HK$4.4 and HK$4.5, respectively. The company's current stock price corresponds to 3 times and 3 times price-earnings ratios, 0.5 times, and 0.5 times net market-share ratios in 2026 and 2027. The dividend yields for 2026 and 2027 are 12.8% and 13.0%, respectively. The bank maintains a “outperforming industry” rating and a target price of HK$18.51, which corresponds to a price-earnings ratio of 4 times in 2026, and has 37% upside compared to the current stock price.

Risk Alerts

Gold prices fluctuated greatly, industry competition intensified, and channel improvements fell short of expectations.