GF Securities released a research report forecasting Chow Tai Fook's (01929) net profit attributable to shareholders for FY26-28 at HK$7.99 billion, HK$9.026 billion, and HK$9.818 billion, representing year-on-year growth of 35.0%, 13.0%, and 8.8%, respectively. Based on comparable company valuations, the firm assigned a 25x P/E for FY26, deriving a target price of HK$19.99 per share and initiating a "Buy" rating. Key highlights from the report include:

**Interim Performance Review**: For the first half of FY26 (April 1–September 30, 2025), Chow Tai Fook reported revenue of HK$38.99 billion, down 1.1% YoY, while operating profit rose 0.7% to HK$6.82 billion. Operating margin improved by 0.3 percentage points to 17.5%, with net profit attributable to shareholders flat at HK$2.56 billion. The company declared an interim dividend of HK$0.22 per share, maintaining an 85.7% payout ratio. Same-store sales grew 2.6% in mainland China and 4.4% in Hong Kong and Macau.

**Resilient Profitability Driven by Premium Jewelry**: In mainland China, same-store sales for premium jewelry surged 8.3% YoY, with priced gold products up 3.1%. In Hong Kong, Macau, and other markets, premium jewelry sales climbed 6.1%, while priced gold jumped 8.5%. Average selling prices for premium and priced gold rose significantly, with steady performance in gem-set categories. Signature product lines fueled a 9.3% YoY increase in retail sales of premium jewelry, lifting its revenue share from 27.4% to 31.8% and supporting a gross margin of approximately 30.5%.

**Store Optimization and Efficiency Gains**: As of FY26H1, Chow Tai Fook operated 6,041 stores, a net reduction of 603 from the prior period, as it phased out underperforming outlets and expanded high-efficiency flagship stores. New stores opened in FY26H1 achieved average monthly sales of HK$1.3 million, up 72% YoY. Post-October retail sales accelerated sharply, rising 33.9% from October 1 to November 18, compared to 4.1% growth in July–September. Mainland same-store sales soared 38.8%, led by 93.9% and 23.0% growth in premium and priced gold jewelry, respectively.