＜Research＞UBS Cuts CHOW TAI FOOK (01929.HK) TP to $12.3; Short-term Demand Pressured by Gold Volatility

　　UBS released a report, lowering its FY25 to FY27 EPS forecast for CHOW TAI FOOK (01929.HK) -0.450 (-5.689%) Short selling $7.15M; Ratio 18.703% by 4% to 12%, reflecting the short-term pressure on industry demand from gold price volatility and shop network optimisation. The broker also dropped its target price for CTF from $13.6 to $12.3, corresponding to 16x FY25 projected P/E ratio, and maintained its Buy rating.

　　UBS quoted CTF's management as saying that it was difficult to provide accurate guidance due to volatile market conditions, and that it would provide further guidance on full-year results when it released its interim results. The report also covered that the company net closed 91 retail outlets in the quarter ended June, and the group is expected to continue to optimise its existing channels.

　　CTF's quarterly gross profit margin improved YoY, benefiting from an increased share of sales of fixed-price gold products and higher gold prices, despite the deleveraging effect caused by the control of operating expenses and capital investment, which has resulted in volatility and uncertainty in the short-term operating profit margin.

　　The broker also believed that the product upgrade for the Rouge Collection series in July and the launch of the Palace Museum themed series in August will further support the sales of fixed-price products, which have higher gross margins.

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-07-23 16:25.)