Citi: Lowered Chow Tai Fook's target price to 11.4 Hong Kong dollars, first quarter sales weaker than expected

Golden Ten Data on July 24, Citi issued a report pointing out that due to the fact that gold prices are at historical highs and macroeconomic weakness has hindered demand, Chow Tai Fook (01929. HK) retail sales in the first quarter fell by 20% year-on-year, worse than expected. According to the bank, Chow Tai Fook’s management said that the gross profit margin in the first quarter improved significantly due to the increase in the sales mix of gold price pumps, fixed-price gold products, and continued disciplined cost management. The bank’s sensitivity test showed that Chow Tai Fook’s core earnings fell by 5 to 23% and revenue fell by 10 to 20% in FY2025, corresponding to a price-to-earnings ratio of 9.6 to 11.8 times, and a historical low of 9 to 10 times. The bank expects the stock to come under pressure in the short term, but maintains a “buy” rating and lowers the target price from HK$14.2 to HK$11.4 due to the attractive valuation.