According to the report released by Sinolink Securities, Chow Tai Fook (01929) announced its unaudited main business data for FY2025Q1, with a year-on-year decline of 20.0% in retail value of the group as of June 30, 2024. In terms of same-store sales, mainland China and Hong Kong/Macao's same-store sales declined by 26.4%/30.8% respectively. The bank predicts that Chow Tai Fook's income will be HK$105.5/109.2/111.8 billion for FY2025-FY2027, with a year-on-year change of -3%/+3%/+2%, achieving a net income of HK$6.857/7.131/7.307 billion, with a growth rate of 5%/4%/2%, and EPS of HK$0.69/0.71/0.73 respectively.

Cinda Securities' main points are as follows:

Since April, the price of gold has been at a historical high and has fluctuated significantly. Consumer sentiment is cautious, and same-store performance in mainland China and Hong Kong/Macao has weakened compared to the previous quarter.

In terms of channels, FY2025Q1 mainland China's direct sales, mainland China's franchise and Hong Kong/Macao's same-store sales all declined by 26.4%, 19.1% and 30.8% respectively (of which Hong Kong/Macau's same-store sales declined by 27.4%/41.3% respectively); in FY2024Q4 (corresponding to 2024Q1), they respectively declined by 2.7%, increased by 8.3% and declined by 4.5%. The same-store performance in Hong Kong/Macao was more pronounced than that in mainland China in FY2025Q1, and franchise same-store performance in mainland China performed better overall than direct sales. The decline in June same-store sales is slightly narrower than that in April and May, consistent with social retail trend. According to the company's disclosed operating data for May 2024, the retail value of the group has decreased by 20.2% year-on-year, of which the retail value in mainland China/Mainland China, Hong Kong and other markets has decreased by 18.8%/29.0% respectively. In terms of same-store sales, direct sales same-store sales in mainland China/Hong Kong and Macao declined by 27.6%/32.0% respectively, of which same-store sales volume declined by 39.7%/37.3%. Each data in FY2025Q1 (corresponding to natural year 24Q2) performed slightly better than that in April-May 24. According to the National Bureau of Statistics, the retail sales of gold, silver and jewelry in April/May/June 2024 decreased by -0.1%/-11.0%/-3.7% year-on-year. The bank predicts that the maximum decline in May was mainly due to the fluctuation of gold prices affecting the performance of the jewelry sales peak season during the May Day holiday, and the monthly sales trend of Chow Tai Fook Group is consistent with the social retail data trend.

The decline in same-store sales in June was slightly narrower than that in April and May, in line with the trend of social retail data.

According to the company's disclosed operating data for April and May 2024, the retail value of the group has decreased by 20.2% year-on-year, of which the retail value in mainland China/Mainland China, Hong Kong and other markets has decreased by 18.8%/29.0% respectively. In terms of same-store sales, direct sales same-store sales in mainland China/Hong Kong and Macao declined by 27.6%/32.0% respectively, of which same-store sales volume declined by 39.7%/37.3%. Each data in FY2025Q1 (corresponding to natural year 24Q2) performed slightly better than that in April-May 24. The bank predicts that the maximum decline in May was mainly due to the fluctuation of gold prices affecting the performance of the jewelry sales peak season during the May Day holiday, and the monthly sales trend of Chow Tai Fook Group is consistent with the social retail data trend.

The quarterly average selling price of gold and inlaid products has generally increased year-on-year, which the bank believes is mainly due to the rise in gold prices and the resilience of high-unit-price products sales.

In FY2025Q1, the average selling prices of gold jewelry in mainland China and Hong Kong/Macao's same-store sales were HK$6200 and HK$8900 respectively, compared to HK$5400 and HK$8400 respectively in FY2024Q1. Meanwhile, for the same period, the average selling prices of inlaid jewelry in mainland China and Hong Kong/Macao's same-store sales were HK$8600 and HK$16400 respectively, compared to HK$7800 and HK$16700 respectively in FY2024Q1. The bank believes that the increase in average selling price is mainly due to 1) the year-on-year increase in gold prices driving up the pricing of per-gram gold products, priced gold products, and K-gold inlaid products; 2) the fluctuation of gold prices helping the company screen customers, and the consumer sensitivity to the sales of traditional gold jewelry that is priced per gram being the most affected by gold prices. Priced gold and inlaid jewelry products focus more on brand awareness and product design, and are less sensitive to fluctuations in gold prices. Chow Tai Fook's products in this category are usually positioned at a higher price point than traditional per-gram gold jewelry.

Risk warning: Stores are not opened as expected, same-store growth is not as expected, there is a drastic fluctuation in gold prices, new product promotion is not as expected, and industry competition intensifies.