Luk Fook Holdings (International) (0590) H2 2024 earnings summary

Executive summary

• FY2024 revenue rose 28% year-over-year to HK$15.33 billion, driven by robust gold sales and border reopening in Hong Kong and Macau, with retailing as the main growth engine.

• Retailing revenue surged 45.3% to HK$12.75 billion, accounting for 83.2% of total revenue, with gold products as the main driver.

• Operating profit increased 34.2% to HK$2.12 billion, aided by a one-off gain from the HKRH acquisition.

• Net profit attributable to equity holders grew 37.6% to HK$1.77 billion, the second highest in company history.

• Worldwide shop count increased by 478 to 3,583, with significant expansion in Mainland China.

Financial highlights

• Gross profit increased 29.2% to HK$4.17 billion; gross margin slightly up to 27.2%.

• EBITDA rose 32.8% to HK$2.60 billion; adjusted EBITDA margin increased to 14.7%.

• Net margin improved to 11.5%, up 0.8 p.p. year-over-year.

• Basic EPS up 37.4% to HK$3.01; final and annual dividends of HK$0.64 and HK$1.41 per share, payout ratio 47%.

• Inventory turnover days improved by 68 days to 310 days; net cash at HK$570 million.

Outlook and guidance

• No specific revenue growth guidance for FY2025 due to macro uncertainties; maintaining FY2024 levels would be considered strong.

• SSS from April to 21 June 2024 declined ~35% in Hong Kong/Macau and ~20% in Mainland due to high gold prices.

• Double-digit growth targeted if conditions allow; margin expected to remain stable.

• Overseas expansion prioritized, with a plan to net 15 new shops, mainly licensed, in FY2025.

• FY2025 CAPEX budget set at HK$95 million, mainly for shop renovation and equipment upgrades.