News alert: 3Q FY22 operating data in line; SSSG outperformed major peer
- Luk Fook scored 33% SSSG in China and 41% SSSG in HK/Macau during 3Q FY22 (i.e. Oct-Dec 2021) and outperformed Chow Tai Fook
- The company stays on track to add c.500 stores in Mainland China for FY22, and sees ample room to open more stores in 4th to 6th-tier cities ahead via its licensees given good prospects of mass luxuries
- We maintain BUY on Luk Fook with TP of HK$30
Luk Fook: operating data summary for 3Q FY22 (i.e. Oct-Dec 2021):
- Luk Fook reported a 45% y-o-y same-store sales growth (SSSG) in 3Q FY22 (i.e. Oct-Dec 2021) across its self-operated stores, driven by 33% SSSG in Mainland China and 41% SSSG in HK/Macau (HK: +57% on a much lower base; Macau: +20%). [Chow Tai Fook: 3Q FY22 SSSG reached +10.7% in Mainland China, and +14.4% in HK/Macau including 9.9% in HK and 27.9% in Macau]
- In terms of product performance (self-operated stores), gold products scored a 52% SSSG (Mainland China: +58%; HK/Macau: +45%) along with the mild decline in gold prices, while fixed price jewelleries saw 31% SSSG (Mainland China: -17%; HK/Macau: +35%). [Chow Tai Fook: 3Q FY22 SSSG of gold products reached +23.3% in Mainland China and +46.9% in HK/Macau; SSSG of gem-set jewellery reached -8.9% in Mainland China and -19.4% in HK/Macau]
- Operations of licensed stores in China saw c.15% SSSG, driven by 30% SSSG in gold product sales that was partially offset by a high single-digit drop in fixed price jewellery same-store sales.
- Total retail revenue of both self-operated & licensed stores in Mainland China went up by c.30% (comprising 50% growth in gold product sales, and a low single-digit growth in fixed price jewellery sales along with 30%+ growth in fixed price gold product sales but a low double-digit decline in diamond product sales). HK/Macau retail revenue grew by c.40%. [Chow Tai Fook: 3Q FY22 retail sales up 38.8% (self-operated stores) and 65.2% (franchised stores) in Mainland China, but down 8.7% in HK/Macau]
- E-commerce revenue in Mainland China registered 51% growth during the quarter, including a 72% growth in gold product sales and 4% growth in fixed price jewellery sales. [Chow Tai Fook: 3Q FY22 smart retail sales in Mainland China grew by 74.1%]
- During 3Q FY22, it saw a net increase of 155 shops (predominantly “Lukfook” shops) in Mainland China to reach 2,683 stores as of Dec 2021 (including 2,596 “Lukfook” shops of which 2,519 shops were licensed stores; 85 “Goldstyle” shops of which 80 were licensed stores; 1 “Dear Q” shop; and 1 “Lukfook Joaillerie” shop which was a licensed store). Together with 45 stores in HK (-1 shop in 3Q), 15 stores in Macau (+1 shop), as well as 14 stores in overseas markets of which 5 were licensed stores (+1 shop in 3Q), total store number for the company reached 2,757 stores as of Dec 2021. [Chow Tai Fook: 3Q FY22 saw net opening of 432 stores in Mainland China, mainly via its franchisee]