Soochow Securities Initiates Coverage on LUK FOOK HOLD (00590) with "Buy" Rating, Highlights Multi-Brand Strategy Across Segments

Stock News12-11

LUK FOOK HOLD (00590), a leading jewelry retailer in Hong Kong and mainland China, was initiated with a "Buy" rating by Soochow Securities. Listed on the Hong Kong Stock Exchange in 1997, the group expanded its multi-brand portfolio by acquiring full control of China Golddeal International in 2024.

**Key Financials**: By FY2025, the company operated over 3,100 retail points across 11 countries and regions, generating revenue of HKD 13.34 billion (-13.0% YoY) and net profit of HKD 1.10 billion (-37.8% YoY). Inventory of gold/platinum and priced jewelry stood at HKD 5.46 billion (+22.9% YoY) and HKD 5.28 billion (+3.0% YoY), respectively, benefiting from rising gold prices.

**Segment Performance**: - Retail/wholesale/brand businesses contributed HKD 11.03 billion (-13.5% YoY), HKD 1.41 billion (-8.8% YoY), and HKD 0.90 billion (-12.6% YoY), with operating margins of 9.3%, 1.0%, and 69.2%. - Greater China (Hong Kong, Macau, and overseas) accounted for 60.5% of revenue (HKD 8.07 billion, -19.6% YoY), with per-store sales averaging HKD 74.7 million, outperforming mainland China’s HKD 1.66 million per store.

**Multi-Brand Strategy**: The group’s portfolio includes core brand LUK FOOK JEWELLERY (2,805 stores globally), China Golddeal (239 stores), and niche labels like Goldstyle and Love LUKFOOKJEWELLERY, catering to diverse consumer demands. Recent product innovations include the "Ice·Diamond Light Shadow Gold" series (launched November 2024), leveraging CNC color technology, and a brand ambassador partnership with actor Cheng Yi (April 2025).

**Expansion Plans**: As of March 2025, LUK FOOK HOLD had 3,287 stores worldwide, including 3,179 in mainland China. The company aims to enter three new markets and add 50 overseas stores by FY2028 (20 in FY2026). Domestically, it focuses on multi-format stores, e-commerce, and collaborations/IP tie-ups to drive growth.

**Earnings Outlook**: Soochow forecasts net profit of HKD 1.52 billion (+39% YoY), HKD 1.73 billion (+13%), and HKD 1.93 billion (+12%) for FY2026-FY2028, with FY2026 PE at 10x.

**Risks**: Slower-than-expected consumption recovery, gold price volatility, and expansion delays.

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