[ET Net News Agency, 15 May 2018] Nomura raised its target price for Luk Fook Holdings
(00590) to HK$42.2 from HK$39.6, and retained its "buy" rating.
The research house said Luk Fook's 4Q FY2018 SSSG surged to 16% from 1% in the previous
quarter, mainly driven by a 18% increase in its Hong Kong SSSG. As Luk Fook has the
highest sales contribution from Hong Kong, versus its jewellery peers, Nomura expects the
company to be the biggest beneficiary of the positive momentum in Hong Kong SSS driven by
the revival of inbound tourists.
Nomura lifted its FY2019 HK SSSG to 12%, from 6% previously. While China's SSSG for
self-operated stores remained negative at 2% in 4Q FY2018, the research house believes it
is more important to look at the performance of Luk Fook's licensed stores, as these
account for 90% of its total POS in China.
Nomura lifted its FY2018-20 net profit by 1-4%, on higher SSSG assumptions. (KL)