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Luk Fook Holdings (International) (HK:0590)
:0590

Luk Fook Holdings (International) (0590) AI Stock Analysis

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HK

Luk Fook Holdings (International)

(OTC:0590)

Rating:78Outperform
Price Target:
Luk Fook Holdings exhibits strong financial performance with robust revenue and profit growth, supported by solid operational efficiency and a stable balance sheet. The technical analysis indicates strong upward momentum but also highlights overbought conditions, suggesting potential volatility. The stock is attractively valued with a low P/E ratio and high dividend yield, making it appealing for value and income-focused investors. The overall score reflects these strengths while considering technical caution.
Positive Factors
Dividend Yield
The company offers an attractive dividend yield of over 5%, with a commitment to paying a significant portion of earnings as dividends.
Growth Strategy
The company plans to open 50 new stores in China and 20 overseas, which supports its asset-light growth strategy.
Scalability and Expansion
Luk Fook's asset-light model enhances scalability and brand visibility, supporting long-term expansion.
Negative Factors
Gold Hedging Losses
Gold hedging losses could affect reported profits, but adjusted earnings should remain supportive.
Profit Forecasts
The company could incur higher gold hedging losses vs. original expectations, leading to a cut in net profit forecasts.
Revenue Decline
Luk Fook's FY25 revenue declined due to high gold prices, which dampened gold product sales.

Luk Fook Holdings (International) (0590) vs. iShares MSCI Hong Kong ETF (EWH)

Luk Fook Holdings (International) Business Overview & Revenue Model

Company DescriptionLuk Fook Holdings (International) Limited, an investment holding company, engages in sourcing, designing, wholesaling, trademark licensing, and retailing various gold and platinum jewelry, and gem-set jewelry products. It is also involved in gold bullion trading; wholesaling polished diamonds; property holding; wholesaling and retailing watches; electronic retailing of gold and jewelry products; and the provision of quality examination services, as well as the authentication of gemstones. The company provides software development and internet related services, as well as engages in the brand building and promotion activities. As of March 31, 2022, it operated a total of 2,809 shops including 2,719 Lukfook shops, 84 Goldstyle, 2 Lukfook Joaillerie shops, 3 Heirloom Fortune shops, and 1 Dear Q shop in Hong Kong, Macau, Mainland China, Singapore, Malaysia, Cambodia, the Philippines, the United States, Laos, Canada, and Australia. The company was founded in 1991 and is headquartered in Sha Tin, Hong Kong.
How the Company Makes MoneyLuk Fook Holdings generates revenue primarily through the sale of jewelry and related luxury items. Its main revenue streams include retail sales from its extensive network of stores and franchises, wholesale distribution to other retailers, and e-commerce platforms. The company benefits from strategic partnerships with suppliers and designers to produce exclusive jewelry collections, enhancing its product offerings. In addition, Luk Fook Holdings engages in marketing and branding initiatives to attract customers and drive sales, leveraging its reputation as a trusted and prestigious brand in the jewelry industry.

Luk Fook Holdings (International) Financial Statement Overview

Summary
Luk Fook Holdings demonstrates strong financial health across all verticals. The company has achieved impressive revenue and profit growth, underpinned by solid operational efficiency. The balance sheet is robust with low leverage and a high equity ratio, providing financial stability. Cash flows are generally strong, though there's room for improvement in Free Cash Flow management. Overall, the company's financial statements reflect a well-managed business with a strong growth trajectory and sound financial footing.
Income Statement
85
Very Positive
Luk Fook Holdings has shown strong revenue growth with a 27.99% increase from the prior year. The company maintains solid profitability, evidenced by a Gross Profit Margin of 27.23% and a Net Profit Margin of 11.53% for the latest year. EBIT and EBITDA margins are also robust at 13.81% and 17.02% respectively, indicating efficient operational management. Overall, the income statement reflects strong revenue growth and solid profitability, supporting a high score.
Balance Sheet
78
Positive
The balance sheet of Luk Fook Holdings reveals a healthy financial position with a low Debt-to-Equity Ratio of 0.16, indicating low leverage. The Equity Ratio stands strong at 76.50%, showing a high proportion of assets financed by equity. However, the Return on Equity (ROE) is at 13.71%, which while healthy, suggests room for improving asset utilization for better returns. The balance sheet is stable with low leverage and high equity, but moderate ROE slightly impacts the score.
Cash Flow
80
Positive
The cash flow analysis shows a positive Free Cash Flow of 986.53 million HKD. The Operating Cash Flow to Net Income Ratio is 0.94, indicating efficient conversion of income to cash. However, Free Cash Flow has declined compared to the previous year, suggesting potential areas for improvement in cash management. The cash flow remains strong overall, with efficient operations supporting a high score, though with some caution due to declining Free Cash Flow.
BreakdownTTMMar 2024Mar 2023Mar 2022Mar 2021Mar 2020
Income Statement
Total Revenue13.29B15.33B11.98B11.74B8.86B11.23B
Gross Profit3.87B4.17B2.86B2.80B2.11B2.73B
EBITDA1.78B2.61B1.98B2.17B1.83B1.80B
Net Income1.26B1.77B1.28B1.39B1.02B866.32M
Balance Sheet
Total Assets17.09B16.85B14.93B16.22B14.51B13.93B
Cash, Cash Equivalents and Short-Term Investments1.93B2.00B2.35B3.49B3.55B2.71B
Total Debt2.04B2.03B860.20M2.31B1.51B2.27B
Total Liabilities3.93B3.99B2.71B4.14B3.19B3.51B
Stockholders Equity13.22B12.89B12.22B12.08B11.32B10.37B
Cash Flow
Free Cash Flow1.90B986.53M1.25B358.04M2.36B2.90B
Operating Cash Flow2.01B1.66B1.36B813.52M2.50B3.06B
Investing Cash Flow-197.59M-777.34M-97.56M-487.13M-269.25M-390.73M
Financing Cash Flow-2.24B-1.26B-2.30B-447.37M-1.53B-1.95B

Luk Fook Holdings (International) Technical Analysis

Technical Analysis Sentiment
Positive
Last Price21.20
Price Trends
50DMA
18.81
Positive
100DMA
16.98
Positive
200DMA
15.65
Positive
Market Momentum
MACD
0.64
Negative
RSI
65.59
Neutral
STOCH
88.32
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0590, the sentiment is Positive. The current price of 21.2 is above the 20-day moving average (MA) of 20.20, above the 50-day MA of 18.81, and above the 200-day MA of 15.65, indicating a bullish trend. The MACD of 0.64 indicates Negative momentum. The RSI at 65.59 is Neutral, neither overbought nor oversold. The STOCH value of 88.32 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0590.

Luk Fook Holdings (International) Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
78
Outperform
HK$12.24B11.138.44%10.55%-4.33%-19.79%
78
Outperform
$4.56T21.4121.25%0.90%8.88%54.27%
76
Outperform
$203.23B7.339.66%8.57%9.97%-19.80%
76
Outperform
HK$133.77B22.8922.73%2.95%-17.53%-8.90%
63
Neutral
$16.67B10.96-6.97%3.00%1.72%-24.21%
47
Neutral
€44.94B129.952.31%0.84%37.06%72.51%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HK:0590
Luk Fook Holdings (International)
21.35
7.33
52.27%
HK:1788
Guotai Junan International Holdings Limited
6.08
5.49
935.78%
HK:1109
China Resources Land
28.25
3.73
15.21%
HK:0700
Tencent Holdings
504.50
130.17
34.77%
HK:1929
Chow Tai Fook Jewellery Group
14.16
6.54
85.88%

Luk Fook Holdings (International) Corporate Events

Luk Fook Holdings Reports Mixed Q4 FY2025 Results with Strategic Shifts
Apr 17, 2025

Luk Fook Holdings reported a mixed performance for the fourth quarter of FY2025, with overall retail sales value and revenue remaining flat year-on-year. The company saw a notable turnaround in its fixed price jewelry segment, which grew by 12%, driven by a strategic shift from diamond to fixed price gold products. Despite a challenging environment with high gold prices, the company’s strategy appears to be yielding positive results in specific product categories, although the overall same-store sales dropped by 10%.

Luk Fook Holdings Announces Board of Directors Composition
Apr 1, 2025

Luk Fook Holdings (International) Limited has announced the composition of its Board of Directors, detailing the roles and functions of each member. This announcement underscores the company’s commitment to maintaining a robust governance structure, which is crucial for its strategic direction and operational effectiveness. The board comprises executive, non-executive, and independent non-executive directors, reflecting a balanced approach to leadership and oversight.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 23, 2025