Zhou Dafu And Liu Fu Ratings And Target Price Increase

Hongkong's two largest jewellery retailer Zhou Dafu Jewelry Group Co., Ltd. and Lufu Group Co., Ltd. were awarded the Exane BNP Paribas SA in February 29th, and the stock price and target price of the Paris bank increased sharply.

According to the data, Zhou Dafu's retail value dropped 29% during the Spring Festival this year, and the same store sales fell by 28% year-on-year. Sales of the same store in the mainland dropped by 31%, while Hongkong and Macao were hit by the continued decline of the mainland visitors and the weakening of the retail market, while the same store sales decreased by 22%.

In the past 12 months, Zhou Dafu saw a high of HK $9.88, and in the middle of January, it reached a new low of HK $4.20, or 57.5%.

While the three quarter sales in the same quarter increased from 25% in the two quarter to 25% in the same quarter, while the mainland and Hong Kong and Macau declined by 10% and 26% respectively.

Since the beginning of 2015, the group has estimated that it has fallen by more than 48%.

In the research report published today, farba expects

The profit and earnings ratio of Lufu group in the 2017 fiscal year will be 1.2 times and 0.9 times, respectively.

Zhou Dafu today closed up 3.11%, at HK $4.64, while Lufu group closed up 2.53%, at HK $15.4, while Hang Seng Index fell 1.3% throughout the day.

The report points out that gold prices have risen by 15.7% this year, and the sharp fluctuations in the stock market, especially in the Shanghai and Shenzhen stock markets, will push the flow of gold into gold and thus push up the price of gold. This year, gold prices are expected to rise further by 10% to 1350 us dollars per ounce, which will stimulate the same store sales of gold products to rebound.

As for

According to farba, its hedge ratio (20%) is low, and

The higher proportion will benefit more from the rise in gold prices, and the same store sales are expected to reverse the decline since the fourth quarter of 2014.

The bank raised its rating from "hold" to "buy", the latest target price was HK $20, and the original price was HK $16.25.

According to farba, the sale of Zhou Dafu's mainland stores during the Spring Festival was due to the increase in the number of outbound tourists, which led to holiday consumption outflow and recent stock market volatility, which led to the weakness of luxury consumption. This does not fully represent the overall trend. The bank believes that the same store sales decline so far this year has already contracted, so that the target price of Zhou Dafu has been raised to HK $4.75, and the rating has also been raised from "reduction" to "holding".

The bank also expects Chow Tai Fook to close 4-6 stores and 6-8 storefronts in 2016 and 2017 fiscal year respectively. It is expected that there will be double-digit declines in the rents of street shops, while the rent will continue to increase in a single digit range, and the total cost will decrease.