Chow Tai Fook Jewellery shares soar as investors look ahead and bet on comeback through mainland-heavy strategy
- China’s largest jewellery retailer says yearly sales through March ‘severely suffered’ largely due to the coronavirus; net profit tumbled nearly 37 per cent
- Chairman sees ‘signs of recovery’ as it continues to grow in China and expands its use of e-sales and live streaming
Shares of Chow Tai Fook Jewellery Group soared Friday as investors looked past disappointing yearly results to bet on the huge jewellery retailer’s comeback strategy of continued expansion in mainland China and cost-cutting in Hong Kong and Macau.
Its mainland operations “severely suffered” due to the coronavirus in the year through March 31, but China’s largest jewellery retailer said “we have seen signs of recovery as the business in Mainland China resumes”. Sales have been helped by supportive policies for businesses by the government and the end of lockdowns, it said in an overnight filing.
“Despite the recent headwinds, we remain optimistic about the mid-to long-term prospects of the jewellery market in Mainland China,” Chairman Henry Cheng said in its filing to the Hong Kong stock exchange.
Shares soared as much as 6.5 per cent to HK$7.08, after the jeweller reported its net profit for the year ending March 31 fell 36.6 per cent to HK$2.9 billion (US$370 million) while revenue dropped 14.9 per cent to HK$56.8 billion. Analysts tracked by Bloomberg had expected a net profit of HK$3.5 billion and revenue of HK$57.4 billion.
The stock finished with a 5.9 per cent gain, at HK$7.04.
Shares of Sa Sa and Sogo’s Hong Kong-listed operator Lifestyle International Holdings have been beaten down this year, and both slipped on Friday.
