UBS has released a research report, raising its target price for CHOW TAI FOOK (01929) from HK$16 to HK$16.50. The brokerage maintains a "Buy" rating while adjusting its earnings per share forecasts for the 2027 to 2029 financial years upward by 0.1%, reflecting near-term gross margin pressures and potential hedging gains.

For the first quarter of the 2027 fiscal year ending June 30, CHOW TAI FOOK's total sales grew 15.1% year-on-year, broadly in line with market expectations. Performance was driven by a 10.7% rise in Mainland China and a 44.8% surge in markets outside Mainland China and Macau. Same-store sales growth saw the company's Mainland direct stores, Mainland franchised stores, and Hong Kong and Macau operations record increases of 19.6%, 15.7%, and 41.7%, respectively. The Mainland online channel also showed strong momentum, with a 29% year-on-year gain.

UBS noted that in June, CHOW TAI FOOK's management provided guidance for the 2027 fiscal year, forecasting total revenue growth in the mid-to-high single-digit range. Mainland same-store sales growth is expected to be in the mid-to-high single digits, while Hong Kong and Macau are projected to see low double-digit growth. The company's gross margin is anticipated to be between 26.5% and 27.5%, with an operating profit margin of around 14%. Assuming gold prices remain at US$4,300 per ounce, CHOW TAI FOOK expects hedging gains of approximately HK$500 million to HK$800 million during the period, compared to a hedging loss of HK$6.275 billion in the 2026 fiscal year. With current gold prices below the company's forecast, management expects overall revenue and net profit to remain largely unchanged, accounting for the subdued performance of fixed-price gold products and the stronger sales of weighed gold items.