Morgan Stanley released a research report stating that it has raised CHOW TAI FOOK's (01929) FY2026 EPS forecast by 7% and net profit forecast by 6% to HKD 8.75 billion. For FY2027–2028, EPS forecasts were lifted by 2%, as gold prices are expected to remain near current levels amid a gradual macroeconomic recovery. The bank maintained its target price of HK$19 and an "Overweight" rating.
The report noted that CHOW TAI FOOK's interim results met expectations. The company raised its gross margin guidance from 28.3–28.7% to 31–32%, exceeding the bank's projections. Factoring in higher hedging losses, the updated guidance implies FY2026 net profit growth of 44–55% YoY, reaching HKD 8.5–9.1 billion, with H2 growth accelerating to 75–90% YoY.
From October 1 to November 18, mainland self-operated stores achieved 48.7% same-store sales growth, franchise stores grew 38.8%, and Hong Kong/Macau markets rose 18.3%. Demand remained robust, posting mid-teens growth in November despite post-VAT reform price hikes.
While recent sales have been strong, management maintained its revenue guidance cautiously, citing ongoing observation of post-tax reform demand trends. Current trends already outperform expectations, and the company expressed confidence in its competitive positioning, believing the tax reforms will benefit leading brands like CHOW TAI FOOK.
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