Luk Fook Holdings (International) (0590) H2 2025 earnings summary

Executive summary

• Revenue for FY2025 declined 12.9% year-over-year to HKD 13.3 billion, mainly due to record-high gold prices impacting gold product sales.

• Profit for the year fell 39.3% to HKD 1 billion, with basic EPS down 37.9% to HKD 1.87, impacted by gold hedging losses and absence of prior year's one-off acquisition gain.

• Gross margin improved by 5.9 percentage points to 33.1%, and gross profit rose 5.8% to HKD 4.42 billion.

• Net decrease of 296 shops globally, with 3,287 shops at year-end and a notable increase in 3DG jewelry shops.

• Proposed final dividend of HKD 0.55 per share, annual dividend HKD 1.1 per share, payout ratio 59%.

Financial highlights

• Gold hedging losses surged to HKD 493 million, compared to a prior year gain from 3DG Group acquisition.

• Operating profit dropped 33.3% to HKD 1.4 billion; operating profit margin declined to 10.6%.

• EBITDA fell 22.5% to HKD 2.02 billion; net margin decreased by 3.5 percentage points to 8.0%.

• Total operating expenses increased 13.7% to HKD 2.6 billion, with TOE/revenue ratio up 4.6 percentage points to 19.6%.

• Effective tax rate increased to 22.6% from 15.7% year-over-year.

Outlook and guidance

• Double-digit same-store sales growth expected across all regions in FY2026, with SSS in Mainland up nearly 20% from April to June 2025.

• Three-year strategy (FY2026–FY2028) focuses on overseas market expansion, market-oriented products, and operational efficiency.

• Plans for a net addition of 50 shops in Mainland and 20 overseas in FY2026, with a CapEx budget of HKD 100 million mainly for shop renovations.