HK's Chow Tai Fook FY profit soars 34 pct, in line with forecast

Chow Tai Fook Jewellery Group Ltd, China’s largest jeweller by market value, reported on Thursday a 34 percent jump in its full-year profit, underpinned by improved consumer sentiment and an uptick in mainland tourists to Hong Kong.

The company had enjoyed a year of recovery in mainland China, Hong Kong and Macau, Chairman Henry Cheng said.

Tourist arrivals in April rose 11 percent from a year ago, according to the Hong Kong Tourism Board. The number of mainland tourists climbed 15.2 percent, accounting for 76.5 percent of the total arrivals.

“Against the backdrop of the shifting retail landscape, we remain confident in the prospects of the Greater China jewellery market in FY 2019 and beyond,” Cheng said in an earnings statement to the Hong Kong Stock Exchange.

The company’s net profit rose to HK$4.10 billion ($522 million) for the year ended March 2018 from HK$3.06 billion a year earlier, marking its highest yearly profit in three years. This comes in line with HK$4.25 billion forecast by SmartEstimate.

Revenue for the 12-month period jumped 15.4 percent to HK$59.16 billion from HK$51.25 billion in the year-ago period.

Same-store sales in mainland China rose 8 percent for the year, while businesses in Hong Kong and Macau saw a growth of 10.2 percent.

In April, the jewellery chain operator saw its same-store sales climb 7 percent in China, 17 percent in Hong Kong and Macau.

Smaller rival Luk Fook Holdings saw its same-store sales jump 16 percent in the Jan-March quarter, compared with 1 percent growth in the previous quarter.

Italian label Prada, which generated over 30 percent of its revenue from Chinese consumers at home and abroad, saw double-digit sales growth in greater China in the second half of last year and first month of 2018.

As of end-March, Chow Tai Fook’s retail strength expanded to 2,585 points of sales (PoS), including China, Hong Kong, Macau and Taiwan, compared with 2,381 PoS in the year-ago period.

The company plans to open about 300 PoS in mainland China in 2019, with five in Hong Kong and Macau.

Analysts are positive on Hong Kong’s retail outlook due to favourable economic conditions and a growing tourism sector.

Shares of the Hong Kong-based jeweller surged nearly 36 percent so far this year, while they gained 5.3 percent on the benchmark Hang Seng index.