Gold revaluation turbocharges Chow Tai Fook’s first-half profit

Jewelry retailer Chow Tai Fook Jewellery Group Ltd. (1929.HK) announced on Thursday that it expects to report its net profit for the first half of its current fiscal year rose 90% to 100% year-on-year. It attributed the big increase to fair value gains from the revaluation of gold loan contracts in the latest six-month period through September, compared with fair value losses a year earlier, and improved sales in its core markets.

The company’s retail sales value fell 0.5% year-on-year in the three months ended Sept. 30. Mainland China recorded a 5.3% decline, while Hong Kong, Macao and other markets rose 33.2%. Same-store sales at the company’s directly operated stores in Mainland China rose 2.2%, boosted by higher average selling prices, even as same-store sales volume fell 9.7%. Same-store sales in Hong Kong and Macao rose 29.6%, with Hong Kong up 24% and Macao up 47.3%.

The company’s store network shrank by a net 242 locations in the three months to September, including a net reduction of 240 outlets in Mainland China, leaving it with 5,192 stores at the end of the period. The decline reflected Chow Tai Fook’s ongoing efforts to boost efficiency of its retail network.

Chow Tai Fook shares opened lower on Friday and closed at HK$10.63 by the midday break, down 2.92%. The stock is down 14.1% year to date.

By Lee Shih Ta

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