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?

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. <strong>We believe this divergence is excessive. </strong>
</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

Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Perfect Medical Health / Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">Perfect Medical Health (1830 HK)</a>, post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&amp;investments representing 24% of the market cap.</li>
<li>HK is experiencing a dip in consumer sentiment, and <a href="https://www.smartkarma.com/entities/perfect-medical-health-management" target="_blank" data-smartkarma-citation="entities:3639:1" rel="noopener">t</a>he company isn't immune to it, but flat sales/profitability, a 24% net margin, and &gt;40% ROE provide great margin of safety.</li>
<li>The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.</li>
</ul>



Perfect Medical Health (1830 HK), post a correction of consumer discretionary stocks in HK, now trades at a yield of 11.5%, with cash&amp;investments representing 24% of the market cap.
HK is experiencing a dip in consumer sentiment, and the company isn't immune to it, but flat sales/profitability, a 24% net margin, and &gt;40% ROE provide great margin of safety.
The stock trades at 9.3x FY24 PE and 11.5% yield (assuming a 110% payout average across company history) with a growth option once the HK economy kickstarts.


Perfect Medical: Post Card From HK, Yield of 11.5%

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

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

Perfect Medical: Post Card From HK, Yield of 11.5%

We provide an update on Perfect Medical (1830 HK). The stock trades at 9.3x FY24 PE/11.5% yield (assuming a 110% payout) with a growth option once...

Sameer Taneja

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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

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

Perfect Medical: Post Card From HK, Yield of 11.5%

We provide an update on Perfect Medical (1830 HK). The stock trades at 9.3x FY24 PE/11.5% yield (assuming a 110% payout) with a growth option once...

Sameer Taneja

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...