Goldman Keeps Luk Fook Neutral Rating, Sees Double-Digit Sales Growth

Goldman Sachs kept a Neutral rating on Luk Fook Holdings (00590) with a target price of HK$25, saying the jeweller maintained double-digit sales growth in July and August and remained on track for full-year revenue, according to ETNet. The bank said mainland China retail sales growth recovered from single-digit same-store sales growth in July to double-digit growth in August. Hong Kong saw a mild slowdown in August, which Goldman attributed to local residents taking more summer outbound trips, while Macau and international markets continued to post steady double-digit growth. Goldman also said Luk Fook's gross margin is expected to fall by high single digits to the high 20% range in fiscal 2027 from a stronger level in fiscal 2026 supported by rising gold prices. It added that normalised gross margin for weight-based products is above 20% in a stable gold-price environment, while retail gross margin for fixed-price products is above 40%. The bank said Luk Fook has been closing low-efficiency stores in mainland China, mainly in lower-tier markets opened during the post-pandemic expansion period. It said the company remains cautious on mainland expansion amid ongoing macro uncertainty, prioritising store productivity and return on equity over net store count. Overseas, Luk Fook is on track to meet its three-year corporate target within two fiscal years and expects its overseas store count to exceed 100 in the near term.