3Q FY24 scored 67% SSSG; slightly better than expectations
- Luk Fook’s retailing revenue up 75% in 3Q FY24 (i.e., 3 months ended Dec 2023), or up c.20% vs. the pre-pandemic period of 3Q FY19.
- 3Q FY24 same store sales up 67% y-o-y on a lower base effect for Nov-Dec and the sustained recovery in visitor consumption for HK/Macau.
- Management is particularly optimistic for its operations in the overseas markets and the sound momentum in HK/Macau as inbound tourism continues to improve. Maintain BUY with TP of HK$34.82.
Rising gold prices plus strong gold product sales to log better gross profit. 3Q FY24 average international gold prices rose over 14%, while SSS for its gold products still displayed significant growth of +80%. SSS of fixed price jewelleries / gem-sets +37%, inclusive of +18% in diamond SSS and +70% in fixed price gold products SSS, with HK/Macau market as the main growth driver. Compared to the pre-pandemic period of 3Q FY19, overall SSS reached +16%, mainly fueled by gold product sales despite the 61% increase in gold prices.
Positive outlook. In the near-term, Luk Fook will continue to actively promote non-diamond fixed price jewelleries / gem-sets, especially the fixed price gold products to enhance overall performance on top of the more attractive gold product sales. The company is also optimistic about its immense growth potential in the overseas markets and will proactively allocate more resources to expand its global footprint. A strong growth momentum is also expected to maintain in HK/Macau along with the continuous improvement in tourism. Coupled with better operating leverage, Luk Fook continuously looking to strive to a new height.
Please also refer to the following for more details on Luk Fook’s 3Q FY24 operating data performance.
- Luk Fook’s retailing revenue saw substantial y-o-y growth of 75% in 3Q FY24 (i.e., 3 months ended Dec 2023), or up c.20% vs. the pre-pandemic period of 3Q FY19. Specifically, HK/Macau retailing revenue nearly doubled y-o-y, or outperformed 3Q FY19 by 10%; while Mainland China retailing revenue (i.e., sales of self-operated stores and e-commerce) grew by 40% y-o-y and surpassed 3Q FY19 by 50%. Its overall retail sales value (RSV) also grew by 46% y-o-y during the 3Q FY24, or exceeded the 3Q FY19 level by 40%.
- 3Q FY24 same store sales (SSS) of HK/Macau was +80% (Macau +165%; HK +55%), surpassing the 3Q FY19 level by 10%. SSS of self-operated shops in the Mainland China was +18%. Overall SSS upheld a strong momentum of +67%, given the lower base effect for Nov and Dec and sustained recovery in the number of visitors in HK/Macau.
- Separately, SSS of its licensed stores (>97% of total shop count in Mainland China) scored +19% y-o-y in 3Q FY24, with +24% in gold products SSS and +4% in fixed price jewelleries / gem-sets SSS. Comparing to 3Q FY19, SSS of licensed stores was only behind by a high single-digit. Hence, the overall RSV in Mainland China that included sales from self-operated shops, licensed shops and e-commence increased by 37% y-o-y (gold products +44%; fixed price jewelleries / gem-sets +17%), or up 60% versus 3Q FY19, mainly contributed by gold product sales.
- The overall RSV mix of gold products increased by 1ppt y-o-y to 79%, or up 15ppt from 3Q FY19.
- The average exchange rate of RMB to HKD depreciated by 2% y-o-y in 3Q FY24, or down 4% vs. 3Q FY19.
- As at Dec 2023, total self-operated “Lukfook” shops reached worldwide (including 68 in Mainland China, 50 in HK, 16 in Macau, and 12 in overseas markets). Together with 2,959 licensed shops in Mainland China and 9 in the overseas, the grand total reached 3,114 “Lukfook” shops worldwide plus 239 shops of its sub-brands in Mainland China. Net store addition in Mainland China reached 62 during 3Q FY24 (included the opening of 44 “Lukfook” shops, 18 “Heirloom Fortune” shops, 2 “Lukfook Joaillerie” shops, 4 “Love LUKFOOK JEWELLERY” shops, and the closure of 6 “Goldstyle” shops).