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<Research>BofAS Adds CHOW TAI FOOK (01929.HK) TP to $17.6 as Mgmt Raises Full-yr Profit Margin Guidance
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CHOW TAI FOOK (01929.HK) reported a net profit of $2.5 billion for 1HFY2026 ended September, roughly flat YoY, in line with BofA Securities' expectation, according to BofA Securities' research report. Revenue was $39 billion, down 1% YoY, 3% lower than the broker's forecast. 1HFY2026 gross profit margin was 30.5%, below the broker's estimation of 31.3%, but partially offset by a reduction in the SG&A ratio to 14%, which is lower than BofA Securities' prediction of 15.3%. The management raised the operating profit margin guidance to 18-19%, implying a YoY increase of 1.6-2.6 ppts, originally expected to decline by 0.6-1 ppt YoY. Given the sales trends from October to mid-November and the better-than-expected profit margin guidance, BofA Securities lifted its FY2026/ FY2027 net profit forecasts for CHOW TAI FOOK by 6%/ 1% to $8.7 billion/ $8.8 billion each. Therefore, the broker added its target price from $17.5 to $17.6, equivalent to a projected FY2027 PE ratio of 20x, with rating reiterated at Buy, citing the potential for sustained improvement in same-store sales growth to support valuation re-rating. AASTOCKS Financial News Website: www.aastocks.com |
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