Citi: CHOW TAI FOOK (01929) 1H FY2027 Profit Alert Beats Expectations; Maintain "Buy" Rating

Citi released a research report stating that CHOW TAI FOOK (01929)'s 1H FY2027 profit alert beat expectations. The bank estimates its net profit grew 90% to 100% year-on-year, higher than the market expectation of 80% to 90%. The bank maintains CHOW TAI FOOK's "Buy" rating and target price of HK$15.4. The bank noted that despite store closures exceeding expectations, management maintained its full-year guidance, as new stores are more efficient under the premiumization strategy, and will review the guidance again at the interim results announcement based on trends over the coming months. Citi slightly revised CHOW TAI FOOK's net profit forecasts for FY2027 to FY2029, mainly due to a 3% to 5% cut in mainland China revenue forecasts, offset by a 10% upward revision to Hong Kong and Macau revenue forecasts. The bank believes CHOW TAI FOOK's current valuation is attractive, with approximately 10x forward P/E and a 7% dividend yield having reflected the factor of earnings decline in the second half under a high base, and adjusted the ranking of the China National Gold Group Gold Jewellery jewelry sector to CHOW TAI FOOK, LUK FOOK HOLD (00590), LAOPU GOLD (06181).