UBS: Chow Tai Fook may currently be undervalued, raising target price to HKD 16.

Jin10 data June 17 news, UBS released a research report predicting that Chow Tai Fook (01929.HK) will achieve an average compound annual growth rate of 9% in earnings per share between the fiscal year 2026 and fiscal year 2028, and that the dividend yield for the fiscal year 2026 is expected to reach 6%. Based on the current price level, this corresponds to a forecasted price-to-earnings ratio of 14 times for the next 12 months, which is lower than the industry median of 15 times. The bank believes that Chow Tai Fook is currently undervalued and is confident in its operational guidance for the new year. If the rise in gold prices continues, there is further room for upward adjustments in operational profit guidance. Based on the latest operational performance, performance guidance, higher same-store sales growth expectations, reduced gross margin pressure, and more savings in operating expenses, UBS has raised its operational profit forecast for Chow Tai Fook for the fiscal year 2026 to fiscal year 2027 by 20% to 21%, and the earnings per share forecast has also been raised by 21% to 30%. The target price has been raised from HKD 12 to HKD 16, with a forecast that earnings per share for the fiscal year 2026 will grow by 51% year-on-year, mainly benefiting from a reduction in gold lending losses, as well as brand transformation and product mix improvement. The rating is 'Buy'.