Chow Tai Fook Jewellery Group Ltd (1929.HK): More Than a Gold Proxy

We believe the market continues to view CTF as a gold proxy, with earnings that can be volatile. We think this perception does not fully reflect the operational and financial resilience that CTF has built since its transformation began in 2024. Since 2024, CTF has shifted its strategy toward quality growth and a stronger ROE focus. Its product mix (fixed-price products and signature collections), channel/geographic mix, and store productivity all improved meaningfully, supporting business resilience and reducing reliance on a single market. Management has prioritized margin resilience through tighter inventory control and a more balanced hedging approach, with the hedging ratio down from a peak of ~70% in F24 to 39%. Across seven F27 gold price scenarios, revenue grows from -5% to +6% while EPS rises in each case, supporting DPS resilience;