Jinwu Financial News | CMB International said that Chow Tai ?$#@$ (01929) announced first-half results. Revenue fell 20.4% year on year, in line with the market's agreed expectations. Net profit fell 44.4% year over year, 20% lower than the agreed forecast. This was mainly due to the loss of fair value of gold loans due to weak consumer sentiment and rising gold prices. Does the company pay dividends per share? On top of HK$0.2, a HK$2 billion share repurchase plan was also announced.
The company expects a mid-double digit decline in FY25E revenue. As the increase in gross margin will be partially offset by an increase in SG&A expenses, the operating profit margin will increase by 1.5 to 3 percentage points. The bank lowered its revenue forecast by 15% to 20%, and expects revenue changes of -16.2%, -2.4%, and +3.2% year-on-year for the 2025/2026/2027 fiscal year, respectively. Given that the uncertainty in the current international environment may cause gold prices to continue to fluctuate, the bank expects that the fair value loss of gold loans will continue in the second half of the year. As a result, the bank lowered its net profit forecast by 20% to 30%. Net profit is expected to change by -23.2%, +28.1% and +6.8%, respectively, reaching HK$5 billion, HK$6.3 billion and HK$6.8 billion in the 2025/2026/2027 fiscal year, respectively.
In view of lower net profit expectations, the bank maintained a “buy” rating, but lowered the target price by 31% to HK$10.0. The bank's new target price is equivalent to 20 times the projected price-earnings ratio for FY2025, which is in line with the long-term average of comparable peers.
