Guosen Securities released a research report noting that LUK FOOK HOLD (00590) announced its operating data for October-December 2025, with overall retail sales value increasing by 26% year-on-year and same-store sales growing by 15%, both accelerating compared to the previous quarter. The firm maintains its forecasts for the company's net profit attributable to shareholders for fiscal years 2026-2028 at HKD 1.501 billion, HKD 1.787 billion, and HKD 2.028 billion, respectively, corresponding to price-to-earnings (P/E) ratios of 10.7x, 9x, and 7.9x, and reiterates an "Outperform" rating. Analyzed by region, global markets performed well, with Hong Kong same-store sales up 15%, Macau up 22%, and overseas markets up 11%; in Mainland China, self-operated stores saw same-store sales growth of 7%, while franchise stores achieved a 31% increase. By product category, priced gold continued to lead performance, with the Group's overall same-store sales for priced gold growing by 32% despite a high base of comparison. Priced gold accounted for 17% of the company's total retail sales value. Furthermore, same-store sales for 18K gold and diamond jewelry remained flat, showing a significant improvement from the 10% decline recorded in the previous quarter. The recovery in this category is expected to help boost the company's gross profit margin. Regarding store network expansion, the quarter saw a net closure of 40 stores overall, a slowdown from the net closure of 49 stores in the prior quarter, bringing the total store count to 3,073 by the end of the period. Overseas markets continued their expansion pace, adding 9 new stores during the quarter, resulting in a total of 48 overseas stores by the period's end. Overall, the company sustained its strong growth trajectory from 2025 into the October-December period, with same-store sales in the first seven days of January 2026 showing even more promising results. This performance is attributed to the company's product innovation and upgrades, optimization of store channels, and accelerated overseas development. Moving forward, the company will continue to capitalize on the jewelry consumption trend characterized by the dual attributes of "fashion + value retention," aiming to gain market share through high-quality products and superior store services. Risk warnings include product innovation falling short of expectations, significant fluctuations in gold prices, slower-than-expected expansion of overseas operations, and poor operational management by franchisees.
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