CHOW TAI FOOK(01929) 国信证券·2024-06-14 03:01Investment Rating - The report maintains an "Outperform" rating for Chow Tai Fook (01929 HK) [1][4][8] Core Views - Chow Tai Fook achieved steady growth in FY2024 with revenue of HKD 108 713 billion (+14 82% YoY) and net profit of HKD 6 499 billion (+20 71% YoY) driven by recovery in gold jewelry demand [1][5] - The company proposed a final dividend of HKD 0 3 per share with a full-year dividend payout ratio of 84 6% [1][5] - Retail sales value for April-May 2024 declined by 20 2% YoY mainly due to high gold price volatility impacting consumer demand [1][5] Business Performance Product Categories - Gold jewelry and products revenue increased by 22 5% YoY accounting for 82% of total revenue (+5 1pct YoY) [1][6] - Jewelry inlaid platinum and K-gold jewelry revenue decreased by 13 3% YoY with revenue share dropping to 13 4% (-4 4pct YoY) [1][6] Regional Performance - Hong Kong Macau and other markets revenue grew by 45 6% YoY [1][6] - Mainland China (excluding Hong Kong and Macau) revenue increased by 9 9% YoY accounting for 82 5% of total revenue with same-store sales growth of 1 8% [1][6] - Franchise stores achieved same-store sales growth of 7 4% benefiting from improved store efficiency [1][6] Store Expansion - The company added 136 net new stores in FY2024 reaching a total of 7 782 stores maintaining industry leadership [1][6] Product Innovation - The Heritage series achieved retail value growth of approximately 20% in FY2024 [1][6] - The "Four Beauties of Life" and "Lily of the Valley" series performed steadily [1][6] Financial Performance Profitability - Gross margin decreased by 1 86pct to 20 5% mainly due to higher proportion of lower-margin gold products [1][7] - Adjusted gross margin (excluding unrealized gains/losses from gold borrowing) decreased by 0 9pct to 22 8% [1][7] Cost Control - Selling expenses ratio decreased by 1 78pct to 8 75% [1][7] - Administrative expenses ratio decreased by 0 45pct to 3 48% [1][7] Operational Efficiency - Inventory turnover days improved from 294 days to 274 days [1][8] - Operating cash flow increased by 37 45% YoY to HKD 13 836 billion [1][8] Industry Outlook - The gold jewelry industry is expected to maintain growth momentum supported by gold price and value-preservation demand [1][8] - Brand competitiveness is becoming increasingly important in the industry [1][8] Financial Forecasts - Revenue is projected to grow to HKD 120 048 billion in FY2025 (+10 43% YoY) and HKD 140 149 billion in FY2027 [2][9] - Net profit is forecasted to reach HKD 7 249 billion in FY2025 (+11 53% YoY) and HKD 8 976 billion in FY2027 [2][9] - EPS is expected to increase from HKD 0 65 in FY2024 to HKD 0 90 in FY2027 [2][9] - ROE is projected to remain stable at around 25% from FY2025 to FY2027 [2][9]