Citigroup has issued a research report stating that LUK FOOK HOLD (HKEX: 00590) reported an 86% year-on-year increase in net profit for the fiscal year ending March 2026, aligning with its earlier profit alert. Management anticipates both sales and net profit for the 2027 fiscal year will achieve double-digit growth, significantly surpassing expectations from the bank and the broader market.

Consequently, the bank has raised its net profit forecasts for LUK FOOK HOLD for the 2027 and 2028 fiscal years by 8% and 10%, respectively. The target price has been increased from HK$30.2 to HK$31.8, with a 'Buy' rating reaffirmed.

Management's Outlook and Strategy

The report notes that LUK FOOK HOLD's management expects the overall gross profit margin for the 2027 fiscal year may fall below the 27.2% level seen in the 2024 fiscal year, potentially due to declining gold prices. However, operating leverage and potential gains from gold hedging activities could help cushion the impact on the net profit margin.

The company has plans to achieve a net increase of 30 stores in overseas markets and to enter at least two new countries.

Analyst Forecasts vs. Guidance

Citigroup's current forecast projects LUK FOOK HOLD's net profit for the 2027 fiscal year to reach approximately HK$2.063 billion, representing a modest increase of only 0.8% year-on-year. This projection remains below the management's guidance for double-digit growth.