HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

Chow Tai Fook Jewellery / Equity Bottom-Up

<ul>
<li>The market's assumption of no special dividends in <a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a>'s upcoming FY24 result is conservative, and this does not fit into its usual pattern. </li>
<li>Should it pay special DPS, the dividend yield may reach an attractive 10.7%. With its net cash position, CTF can financially maintain the average 135.6% payout ratio. </li>
<li>A return to its historical average dividend yield of 7.4% means that CTF's share price will need to go up by 45% from the current level.</li>
</ul>


The market's assumption of no special dividends in Chow Tai Fook Jewellery (1929 HK)'s upcoming FY24 result is conservative, and this does not fit into its usual pattern. 
Should it pay special DPS, the dividend yield may reach an attractive 10.7%. With its net cash position, CTF can financially maintain the average 135.6% payout ratio. 
A return to its historical average dividend yield of 7.4% means that CTF's share price will need to go up by 45% from the current level.


Chow Tai Fook (1929 HK): What if Special Dividends Are Declared?

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Chow Tai Fook (CTF) reported 1QFY25 (calendar year 2Q24) operational data with a 20% YoY decline in total retail sales value (RSV).</li><li>RSV in Mainland China/ HK &amp; Macau fell 18/28.8% YoY, with same-store sales growth (SSSG) down 26.4/30.8% YoY.</li><li>The sluggish results were due to weak consumer spending and gold price volatility that intensified consumers' wait-and-see attitude. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Chow Tai Fook (CTF) reported 1QFY25 (calendar year 2Q24) operational data with a 20% YoY decline in total retail sales value (RSV).RSV in Mainland China/ HK &amp; Macau fell 18/28.8% YoY, with same-store sales growth (SSSG) down 26.4/30.8% YoY.The sluggish results were due to weak consumer spending and gold price volatility that intensified consumers' wait-and-see attitude. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Chow Tai Fook (1929 HK) - Sales Under ST Pressure, Fixed-Price Products to Contribute More

Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Douglas Research Advisory

<ul>
<li>Chow Tai Fook Jewellery's shares are down 28.2% YTD, sharply underperforming the Hang Seng Index which is up 6% in the same period. We believe this divergence is excessive. 
</li>
<li>Chow Tai Fook's dividend yield averaged 4.8% from FY20 to FY24. Its annual dividend payout averaged 107% in the same period.</li>
<li>Chai Tai Fook is currently trading at attractive valuations. It is trading at P/E of 10.1x, EV/EBITDA of 7.5x, and P/B of 2.9x based on FY25 consensus earnings estimates. </li>
</ul>


Chow Tai Fook Jewellery's shares are down 28.2% YTD, sharply underperforming the Hang Seng Index which is up 6% in the same period. We believe this divergence is excessive. 

Chow Tai Fook's dividend yield averaged 4.8% from FY20 to FY24. Its annual dividend payout averaged 107% in the same period.
Chai Tai Fook is currently trading at attractive valuations. It is trading at P/E of 10.1x, EV/EBITDA of 7.5x, and P/B of 2.9x based on FY25 consensus earnings estimates. 


Asian Dividend Gems: Chow Tai Fook Jewellery

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> reported a weaker-than-expected FY24 net profit. Despite having HK$2.2bn net cash, the lack of a special dividend is even more disappointing. </li>
<li>Surge in unrealised loss on gold loans and a YoY contraction in margin have contributed to the poor 2H24 result. Apr-May operating figures showed a deteriorated operating environment.</li>
<li>Lacking a special dividend, CTF no longer looks attractive at the current level. Overoptimistic FY25 and FY26 consensus forecasts mean earnings downgrade pressure. </li>
</ul>



Chow Tai Fook Jewellery (1929 HK) reported a weaker-than-expected FY24 net profit. Despite having HK$2.2bn net cash, the lack of a special dividend is even more disappointing. 
Surge in unrealised loss on gold loans and a YoY contraction in margin have contributed to the poor 2H24 result. Apr-May operating figures showed a deteriorated operating environment.
Lacking a special dividend, CTF no longer looks attractive at the current level. Overoptimistic FY25 and FY26 consensus forecasts mean earnings downgrade pressure. 


HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Equity Capital Markets

Mokingran Jewellery Group Ltd / Equity Capital Markets

<ul>
<li>The skyrocketing gold prices have driven up the prices of gold jewelry, but actually dampen the enthusiasm of many people to buy gold jewelry, which will directly affect MOKINGRAN's performance.</li>
<li>MOKINGRAN's prediction of gold price is incorrect. For an industry veteran, MOKINGRAN shouldn’t make such mistakes. The error in the judgment of important raw material trends is worth investors' vigilance.</li>
<li>We think that valuation of MOKINGRAN should be lower than that of <a href="https://www.smartkarma.com/entities/lao-feng-xiang-co-ltd" target="_blank" data-smartkarma-citation="entities:29910:1" rel="noopener">Lao Feng Xiang (600612 CH)</a>/<a href="https://www.smartkarma.com/entities/chow-tai-seng-jewellery-co-ltd" target="_blank" data-smartkarma-citation="entities:29414:1" rel="noopener">Chow Tai Seng Jewellery (002867 CH)</a>/<a href="https://www.smartkarma.com/entities/chow-tai-fook-jewellery-group" target="_blank" data-smartkarma-citation="entities:549:1" rel="noopener">Chow Tai Fook Jewellery (1929 HK)</a> and industry average.</li>
</ul>


The skyrocketing gold prices have driven up the prices of gold jewelry, but actually dampen the enthusiasm of many people to buy gold jewelry, which will directly affect MOKINGRAN's performance.
MOKINGRAN's prediction of gold price is incorrect. For an industry veteran, MOKINGRAN shouldn’t make such mistakes. The error in the judgment of important raw material trends is worth investors' vigilance.
We think that valuation of MOKINGRAN should be lower than that of Lao Feng Xiang (600612 CH)/Chow Tai Seng Jewellery (002867 CH)/Chow Tai Fook Jewellery (1929 HK) and industry average.


Pre-IPO Mokingran Jewellery Group (PHIP Updates) - Some Points Worth the Attention

Hong Kong

Chow Tai Fook Jewellery Group Limited retails jewelry.  The Company sells rings, necklaces, earrings, pendants, bracelets, and small statues.  Chow Tai Fook Jewellery operates retail stores in China, Hong Kong, Macau, Taiwan, Malaysia, and Singapore.

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Chow Tai Fook Jewellery (1929 HK)

Chow Tai Fook (1929 HK): What if Special Dividends Are Declared?

The market's assumption of no special dividends for CTF's FY24 result may be off - potential for an attractive 10.7% yield. The share price could...

Osbert Tang, CFA

Chow Tai Fook (1929 HK) - Sales Under ST Pressure, Fixed-Price Products to Contribute More

Chow Tai Fook (CTF) reported 1QFY25 (calendar year 2Q24) operational data with a 20% YoY decline in total retail sales value (RSV).

CMB International

Asian Dividend Gems: Chow Tai Fook Jewellery

Chow Tai Fook Jewellery's shares are down 28.2% YTD, sharply underperforming the Hang Seng Index which is up 6% in the same period. We believe this...

Douglas Kim

Chow Tai Fook (1929 HK): Disappointed

CTF disappoints with poor 2H24 profit and lack of special dividend. Gold loan losses and margin contraction are key reasons. Earnings downgrade...

Osbert Tang, CFA

Pre-IPO Mokingran Jewellery Group (PHIP Updates) - Some Points Worth the Attention

Skyrocketing gold prices dampen enthusiasm for gold jewelry, impacting MOKINGRAN's performance. Incorrect gold price prediction raises investor...

Xinyao (Criss) Wang

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52-week Range

Market Cap (USDm)

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Chow Tai Fook (1929 HK): What if Special Dividends Are Declared?

​The market's assumption of no special dividends for CTF's FY24 result may be off - potential for an attractive 10.7% yield. The share price could...

Osbert Tang, CFA

Chow Tai Fook (1929 HK) - Sales Under ST Pressure, Fixed-Price Products to Contribute More

Chow Tai Fook (CTF) reported 1QFY25 (calendar year 2Q24) operational data with a 20% YoY decline in total retail sales value (RSV).

CMB International

Asian Dividend Gems: Chow Tai Fook Jewellery

Chow Tai Fook Jewellery's shares are down 28.2% YTD, sharply underperforming the Hang Seng Index which is up 6% in the same period. We believe this...

Douglas Kim

Chow Tai Fook (1929 HK): Disappointed

​CTF disappoints with poor 2H24 profit and lack of special dividend. Gold loan losses and margin contraction are key reasons. Earnings downgrade...

Osbert Tang, CFA

Pre-IPO Mokingran Jewellery Group (PHIP Updates) - Some Points Worth the Attention

​Skyrocketing gold prices dampen enthusiasm for gold jewelry, impacting MOKINGRAN's performance. Incorrect gold price prediction raises investor...

Xinyao (Criss) Wang

The market's assumption of no special dividends for CTF's FY24 result may be off - potential for an attractive 10.7% yield. The share price could...

CTF disappoints with poor 2H24 profit and lack of special dividend. Gold loan losses and margin contraction are key reasons. Earnings downgrade...

Skyrocketing gold prices dampen enthusiasm for gold jewelry, impacting MOKINGRAN's performance. Incorrect gold price prediction raises investor...