CITIC Lyon: Chow Tai Fook (01929) makes a profit and maintains a target price of HK$10.7 and a “holding” rating

The Zhitong Finance App learned that CITIC Lyon released a research report saying that Chow Tai Fook (01929) issued a profit report and updated operating data. The stock price will be supported by Yingxi News. The bank maintains a “holding” rating and a target price of HK$10.7.

The company expects net profit to increase 90% to 100% year-on-year in the first half of fiscal year 2027, mainly due to the recorded fair value earnings from the revaluation of gold loan contracts and improvements in sales performance in major markets. As for the operating data for the second quarter of fiscal year 2027, same-store sales in mainland China and Hong Kong and Macau increased by 2% and 30%, respectively, while retail value decreased by 5% and increased 33% year-on-year, respectively.

According to the bank, although October was pressured by a high base, it is estimated that Chow Tai Fook's net profit for the first half of the 2027 fiscal year was between 4.81 billion and HK$5.07 billion, and revenue for the same period is expected to increase by a high number of units over the same period. Same-store sales in mainland China should have been better than expected in the second quarter of fiscal year 2027, improving quarterly in September after weakening in August. However, same-store sales turned negative in October due to rush purchases before price increases in the same period last year, resulting in a high base.

The company maintains the annual revenue growth target of medium to high units and operating profit margin of 14% or more, but the gold loan revenue will be higher than the previous guidance of 500 million to 800 million yuan. The bank currently estimates 1 billion to 1.5 billion yuan for the first half of the fiscal year and 2027 fiscal year, respectively.