Dongwu Securities: Covering Lukfook Group (00590) for the first time, giving a “buy” rating. The multi-brand matrix fully covers all segments of the racetrack

The Zhitong Finance App learned that Dongwu Securities released a research report saying that Lukfook Group (00590) is one of the leading jewelry retailers in Hong Kong and mainland China. It was listed on the main board of the Hong Kong Stock Exchange in 1997 and successfully acquired a controlling interest in Jinzhizun International in 2024, further enriching the group's multi-brand matrix. First coverage, giving a “buy” rating.

The main views of Dongwu Securities are as follows:

By the end of FY2025, it had more than 3,100 retail outlets in 11 countries and regions around the world

With FY2025, the company achieved revenue of HK$13.34 billion, a year-on-year growth rate of -13.0%; realized net profit to mother of HK$1.1 billion, a year-on-year growth rate of -37.8%. As of the end of the FY2025 period, the company had stocks of gold and platinum/ HK$5.28 billion respectively, +22.9%/+3.0% year-on-year respectively. The increase in gold prices brought benefits.

The Hong Kong and Macau regions of China account for more than half of the revenue, and the revenue performance of individual stores is impressive

By business, FY2025's retail/wholesale/brand business achieved revenue of HK$110.3/14.1/900 million, respectively, of -13.5%/-8.8%/-12.6% year-on-year, accounting for 82.7%/10.5%/6.8%, respectively, and profit margins of 9.3%/1.0%/69.2%, respectively. By region, FY2025 achieved revenue of HK$52.7/8.07 billion in mainland China/Hong Kong, Macau and overseas, respectively, of -0.2%/-19.6% year-on-year, accounting for 39.5%/60.5%, profit margins were 11.0%/13.5%, respectively, and the average revenue of a single store was HK$166/74.7 million, respectively.

The multi-brand matrix covers all segments of the racetrack

At present, the company has formed a multi-brand matrix including Lukfook Jewellery, Gold Supreme, Fu Man Family, Goldstyle, Lukfook Boutique Gallery and Love Lukfookjewellery, covering various gold and jewellery segments to meet the needs of differentiated consumers. Among them, the core brand Lukfook Jewellery has mature sales channels. By the end of FY2025, it had 2,805 stores worldwide. In November 2024, the “Ice Diamond Light and Shadow Gold” series was launched, and CNC colorful technology was used to successfully create large single products. In April 2025, the company invited actor Cheng Yi to act as the global brand ambassador for Lukfook Jewellery, with remarkable promotion results. At the same time, the company launched the Jin Zhizun brand. As of the end of FY 2025, Jin Zhizun had 239 stores.

The brand goes overseas to the next city, and the mainland channel continues to expand

As of the end of March 2025, Lukfook Group covered 11 countries and regions, including mainland China, Hong Kong and Macau, with a total of 3,287 stores, including 3179/58/19/31 stores in mainland China/Hong Kong, China/Macau, and overseas, respectively. In terms of overseas markets, the company plans to enter 3 new countries and regions over the next three years (FY2026-FY2028), with a net increase of 50 overseas stores. Among them, FY2026 plans an overall net increase of 20 overseas stores. In the mainland China market, the company strengthens brand promotion and sales transformation by opening stores of various styles, while actively developing e-commerce sales channels, and through cooperation with celebrities, IP co-branding, etc.

Profit forecast

Lukfook Group is a leading jewellery retailer in Hong Kong and Mainland China. It has now formed a complete multi-brand matrix, covering all gold and jewellery segments to meet the needs of differentiated consumers. Since FY2026, the company's performance has steadily rebounded, and same-store efficiency has continued to improve, showing the company's strong brand strength. The bank predicts that the company's net profit for FY2026-FY2028 will be HK$15.2/17.3/1.93 billion, or +39%/+13%/+12% year over year, respectively. The latest closing price for PE corresponding to FY2026-FY2028 is 10/9/8X.

Risk warning: Domestic consumer market growth falls short of expectations, gold prices fluctuate sharply, store expansion falls short of expectations, brands fall short of expectations, etc.