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 reduced gold product sales amid record-high gold prices.

• Profit for the year dropped 39.3% to HKD 1.07 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 total shops at year-end reaching 3,287.

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

Financial highlights

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

• Operating profit fell 33.3% to HKD 1.41 billion; operating margin declined to 10.6%.

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

• Inventory balance rose to HKD 10.7 billion, with average inventory turnover days up to 427.

• Net cash position turned negative to -HKD 205 million, and net gearing ratio was 1.6%.

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 expansion, market-oriented products, and operational efficiency.

• FY2026 plans include a net addition of 50 shops in Mainland China, 20 overseas, and 2 in Macau; CAPEX budget is HKD 100 million, mainly for shop renovations.

• No significant CapEx planned for FY2025 or FY2026 beyond shop renovations.