[ET Net News Agency, 3 December 2018] HSBC Global Research lowered its target price for
Luk Fook Holdings (00590) to HK$25.3 from HK$29.9 and maintained its "hold" rating.
The research house said Luk Fook's 1H 2019 results beat on stronger than expected
revenue and licensing business. Strong growth in licensing profit and YoY increase in
other revenue offset the drop in GPM by 2.5ppts, to 23.7%.
Management disclosed the SSSG in HK & Macau and China dropped by single- and
double-digits respectively in October. HSBC thinks that growth is under pressure with
weakening RMB and discretionary consumption and cut its FY2020/21 revenue estimates by
3.4% and 3.6%, and net profit estimates by 7.5% and 10% respectively. It kept FY2019
forecasts largely unchanged as it expects revenue and net profit growth in 2H 2019 to slow
to 5.1% and 2.8% respectively, offsetting the strong 1H. (KL)