CTFJ reported strong 3QFY26 (Oct – Dec 2025) sales as group retail sales value grew 17.8% YoY. While it reflects the Company has been minimally affected by the latest VAT adjustment on gold products, it also shows that CTFJ is able to lure more consumers with its refined product launches. While gold price hitting record high in 2026 may slow the momentum for 4QFY26, mgmt. is still confident on the performance, and hence revising the FY26 full year guidance upwards. Overall, we see this quarterly performance encouraging, and should ease some investors’ concern on CTFJ’s earnings, especially GPM. Reiterate BUY.
Key Factors for Rating
Strong 3QFY26 exceeding mgmt. expectations. CTFJ’s group-wide retail sales value (RSV) jumped 17.8% YoY, driven by strong SSSG in both Chinese Mainland and Hong Kong & Macau region (+21%/+14.3%). While this is driven by a stronger Oct 2025 when CTFJ announcement of price hike triggered frontloaded demand, Nov to Dec 2025 still recorded +ve SSSG, and this is also unaffected by another price hike in Nov 2025 to address the VAT policy changes on gold products. Hence, 3QFY26 performance reflected consumer demand was still intact, especially in high tier cities where CTFJ has more presence of its selfoperated store.
Resiliency shown in adjusting product mix, supportive to margins. During 3QFY26, fixed-price jewellery (FPJ) accounted for 40.1% of RSV in Chinese Mainland, up 10.7ppts YoY. We see this an encouraging shift, reflecting CTFJ’s pricing of such products and design are appealing. While such surge of product mix is partly attributed to CTFJ’s price hike in Oct 2025, mgmt. expected FPJ would still account for 33-35% of RSV in the full year of FY26. As 29% of FY25 revenue was from FPJ, we expect higher contribution from FPJ will lift the FY2026 GPM of CTFJ.
Revising FY2026 guidance upwards to account for higher gold price. As 3QFY26 beat, and with higher gold price since Nov 2025, CTFJ’s mgmt. revised upwards for its guidance, which we see positive:
Revenue: MSD YoY growth (previous: LSD)
SSSG: +ve mid-high single digit (previous: MSD)
GPM: 31.5-32.5% (previous: 31-32%)
OPM: close to 20% (previous: 16-18%)
Gold hedging losses: 7% of total revenue, same as FY25 (previous: 6%)
Overall, this guidance suggests reported NPM should still expand in FY26 despite higher hedging losses, given stronger OPM expansion.
4QFY26 may experience slower momentum, but is still strong. We expect CTFJ’s 4QFY26 (Jan – Mar 2026) should see some QoQ deceleration, mainly attributable to strong gold price which once exceeded US$4,800/oz. Mgmt. expected high gold price would weigh on consumers’ purchasing decision, and as Chinese New Year is usually the peak season for weight-based gold jewellery, such demand may be suppressed. However, they are also confident that demand will be shifted to FPJ, as the pricing would be relatively more appealing before another price hike. Hence, we see that the GPM may have more upside than its guidance if the product mix continues to shift towards FPJ.
Key Risks for Rating
Downside risks: (1) unsuccessful brand revamping strategy; (2) deteriorated retail sell-through for core brand; (3) unexpected spike in spending; and (4) weaker GPM and higher-than-expected hedging losses under high gold prices.
Valuation
We revised our FY26 EPS by 7% to factor in the latest guidance after 3QFY26 beat, but only revise up FY27-28 EPS by 0-2% as we now assume a lower GPM in FY27/28 due to higher gold price assumption and hence higher COGS.
We maintain our TP of HK$18.1 unchanged, which is based on 16.5x FY27E reported EPS and equivalent to 20.8x reported FY26E EPS.