Analysts at Citigroup have issued a research report updating their forecasts for Chow Tai Fook (HKEX: 01929). The bank has raised its net profit projections for the fiscal years ending March 2027 and 2028 by 8% to 9%. This revision is primarily driven by an increase in revenue forecasts of 3% to 7% and an upward adjustment to the expected net profit margin.
While Citigroup has maintained its "Buy" rating on the stock, it has lowered the target price from HK$16.7 to HK$15.4. This new target implies a forward price-to-earnings multiple of 15 times for the fiscal year ending March 2027.
The company's financial results for the fiscal year ended March 2026 were in line with market expectations. Net profit grew by 52% year-on-year to HK$9 billion. Management's guidance for both sales and profit margins in the current fiscal year ending March 2027 has exceeded initial forecasts.
Operational performance has shown strength, with same-store sales in Mainland China recovering to a 20% growth rate for the April to May period. Same-store sales in Hong Kong, Macau, and overseas markets surged by 41%. This indicates a rebound in demand for pure gold jewelry, even amid a recent correction in gold prices.
As of March this year, Chow Tai Fook operated eight new high-end concept stores. These outlets have demonstrated significant productivity, generating 8 to 10 times the sales of an average store and showing a 57% improvement in the last fiscal year. Renovated stores also saw productivity gains of 15%.
The group's strategy for the 2027 fiscal year includes opening more high-end and self-operated stores, which are expected to constitute over 50% of new openings. The company also anticipates a substantial reduction in the net number of store closures.
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