CHOW SANG SANG (00116) surged nearly 9% in the afternoon session. As of press time, the stock was up 6.34% to HK$14.25, with turnover reaching HK$69.92 million.

On the news front, CHOW SANG SANG released its interim results showing revenue declined 2% year-on-year to HK$11 billion in the first half, while net profit attributable to shareholders increased 71% to HK$900 million. CICC noted that the company's performance exceeded expectations, primarily benefiting from strong gross margin performance and effective cost control.

The company declared an interim dividend of 21 HK cents per share, representing a payout ratio of 16%, compared to 15 HK cents per share in the same period last year.

The firm pointed out that same-store performance in mainland China and Hong Kong/Macau markets continued to improve in July compared to Q2 2025. Management plans to continue optimizing mainland channels and expects the number of stores to decrease by 10% by the end of 2025 compared to the beginning of the year.

Considering the company's better-than-expected gross margin performance, the firm raised its EPS forecasts for 2025/26 by 50%/34% to HK$1.94/2.01. The current share price corresponds to 7x/7x P/E ratios for 2025/26, maintaining a "Neutral" rating. Due to industry valuation improvements, the target price was raised from HK$8.36 to HK$15.16.