Goldman Sachs released a research report stating that it maintains a "neutral" rating for CHOW TAI FOOK (01929) with a target price of 8 Hong Kong dollars. The guidance for the 2025 fiscal year and the second half of the fiscal year remains unchanged, with same-store sales growth (SSSG) in December roughly aligning with the guidance. In mainland China, there is a double-digit decline, while Hong Kong and Macau see a decline of high double digits to over low 20%.
The report cites management stating that there is enough cash flow to support dividend payments, with free cash flow for the second half of the 2025 fiscal year at 10 billion Hong Kong dollars, sufficient to support capital expenditures as well as a dividend payout ratio of 70-80%. Management also holds a cautious attitude towards the company's performance during the Lunar New Year, and poorly performing stores will continue to close in 2026. If sentiment remains weak, management believes that 6,000 to 6,500 stores can remain open. The company is also upgrading its brand and has opened new concept stores in mainland China. The company plans to open 20-30 new CHOW TAI FOOK "Heritage" series stores in mainland China.
