Northeast Securities has released a research report maintaining a "Buy" rating on Chow Tai Fook (01929). The report states that the company continued to gain growth momentum in FY2026 Q3 despite gold price fluctuations and macroeconomic uncertainties, and it remains optimistic about the improvement in profit quality driven by product mix adjustments and overseas expansion. Revenue for FY2026/2027/2028 is forecasted at RMB 91.93 billion, RMB 96.58 billion, and RMB 101.67 billion, respectively, with net profit attributable to the parent company estimated at RMB 8.53 billion, RMB 9.53 billion, and RMB 10.64 billion, corresponding to a P/E ratio of 15.0x, 13.4x, and 12.0x. The main views of Northeast Securities are as follows:
Chow Tai Fook achieved a strong performance recovery in FY2026 Q3 (October-December 2025). Group retail sales value (RSV) increased by 17.8% year-on-year, with Mainland China rising 16.9%. Same-store sales growth (SSSG) for directly-operated and加盟 stores surged significantly by 21.4% and 26.3%, respectively. Retail sales value in Hong Kong, Macau, and overseas markets grew 22.9% year-on-year, with same-store sales increasing by 14.3%. Notably, same-store sales in the Hong Kong market grew 10.1%, while the Macau market saw a impressive 31.3% increase.
Product structure optimization and high-margin products are key drivers. The company continues to shift its product mix towards higher-margin priced jewelry. In Q3, same-store retail sales value for priced jewelry in Mainland China grew 13.7%, with its contribution rising to 40%, a 10.7 percentage point increase year-on-year, while the share of计价 gold decreased to 56.8%. IP cultural series (such as Chuan Fu, Chuan Xi, and Ancient Method) continued their strong performance, and the diamond and jade businesses have returned to positive growth, contributing to structural optimization. Future plans include launching blind boxes in collaboration with Hong Kong Disneyland to further enrich the product portfolio and enhance appeal. Against the backdrop of rising gold prices, the average selling price increased significantly. The average price for计价 gold in Mainland China rose to HKD 11,000 (up 50.7% year-on-year), and the average price for定价 gold increased to HKD 9,500 (up 82.6% year-on-year).
Channel adjustments, e-commerce, and travel retail show high growth. By the end of 2025, the total number of stores for the "Chow Tai福 Jewelry" brand reached 5,585. The net closure of 230 stores in Mainland China indicates that structural contraction is nearing its end, and the increased proportion of directly-operated stores is expected to improve profitability. E-commerce business in Mainland China grew 25% in FY2026 Q3, accounting for 7.4% of Mainland RSV, driven by promotional events like Double Eleven. The travel retail segment also contributed, with duty-free gold in Hainan attracting significant consumer interest due to its high cost-effectiveness. Overall channel quality and efficiency are improving, supported by integrated passenger flow in core cities and consumption upgrades.
Overseas multi-point expansion continues. The Southeast Asian market, operational for six years, now contributes 15.2% to group RSV, showing significant growth momentum. Same-store sales improved in Southeast Asian markets like Singapore and Malaysia. High-end stores at Singapore's Changi Airport and a flagship store in Bangkok, Thailand, are already operational. Future expansion will continue in Vancouver and Sydney, steadily advancing the dual-track development strategy of "upgrading existing markets + advancing into emerging markets."
Risk warnings include fluctuations in gold prices; slower-than-expected pace of overseas store expansion; and potential underperformance of earnings forecasts and valuations.
Comments