Luk Fook Holdings (International) (0590) H1 2025 earnings summary

Executive summary

• H1 FY2025 revenue fell 27.2% to HK$5,449M; profit attributable to equity holders declined 53.9% to HK$434M.

• Net profit for the period fell 55.7% to HK$417M; excluding gold hedging losses, adjusted profit was HK$647M, down 27.1%.

• Gross margin rose 4.9 p.p. to 32.7%, while gross profit fell 14.4% to HK$1,782M.

• Global shop count decreased by 175 to 3,408 as of 30 September 2024.

Financial highlights

• Operating profit fell 53.0% to HK$536M; operating margin declined 5.4 p.p. to 9.8%.

• Gold hedging swung from a HK$55M gain to a HK$230M loss; adjusted operating profit excluding hedging was HK$766M, down 29.4%.

• Net margin fell to 7.7%; total operating expenses/revenue rose 7.0 p.p. to 21.3%.

• Basic EPS decreased 54.0% to HK$0.74.

• EBITDA was HK$836M, down 39.1%.

Outlook and guidance

• Same-store sales declines narrowed from September, with improvement from October to mid-November; H2 performance was expected to exceed H1.

• Management expected sales to normalize as consumers adapt to high gold prices and remained cautiously optimistic on mid- to long-term prospects.

• Overseas expansion remains a priority, with ~15 net new overseas shops planned in FY2025; Mainland expansion, including licensed shops in lower-tier cities, also remains in focus.

• FY2025 net shop additions are planned at 17; Mainland closures are expected to continue but slow.

• FY2025 CapEx budget is HK$95M, including HK$60M for shop renovation and HK$20M for plant upgrades.