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

• Market Cap: HK$12.24B
• Dividend Yield: 10.55%
• Average Volume (3M): 1.59M
• Price to Earnings (P/E): 11.1
• Beta (1Y): 0.58
• Revenue Growth: -4.33%
• EPS Growth: -19.79%
• Country: HK
• Employees: 6,600
• Sector: Consumer Cyclical
• Sector Strength: 59
• Industry: Luxury Goods
• EPS (TTM): 1.13
• Shares Outstanding: 587,107,850
• 10 Day Avg. Volume: 1,373,236
• 30 Day Avg. Volume: 1,589,199
• PEG Ratio: -1.51
• Price to Book (P/B): 1.21
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 11.75
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: HK$24.49
• Price Target Upside: 15.53% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 78 Outperform
• 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) Business Overview & Revenue Model

Company Description

Luk 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 Money

Luk 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

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

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

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.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	13.29B	15.33B	11.98B	11.74B	8.86B	11.23B
Gross Profit	3.87B	4.17B	2.86B	2.80B	2.11B	2.73B
EBITDA	1.78B	2.61B	1.98B	2.17B	1.83B	1.80B
Net Income	1.26B	1.77B	1.28B	1.39B	1.02B	866.32M
Balance Sheet
Total Assets	17.09B	16.85B	14.93B	16.22B	14.51B	13.93B
Cash, Cash Equivalents and Short-Term Investments	1.93B	2.00B	2.35B	3.49B	3.55B	2.71B
Total Debt	2.04B	2.03B	860.20M	2.31B	1.51B	2.27B
Total Liabilities	3.93B	3.99B	2.71B	4.14B	3.19B	3.51B
Stockholders Equity	13.22B	12.89B	12.22B	12.08B	11.32B	10.37B
Cash Flow
Free Cash Flow	1.90B	986.53M	1.25B	358.04M	2.36B	2.90B
Operating Cash Flow	2.01B	1.66B	1.36B	813.52M	2.50B	3.06B
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 Price: 21.20
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0590	78 Outperform	HK$12.24B	11.13	8.44%	10.55%	-4.33%	-19.79%
0700	78 Outperform	$4.56T	21.41	21.25%	0.90%	8.88%	54.27%
1109	76 Outperform	$203.23B	7.33	9.66%	8.57%	9.97%	-19.80%
1929	76 Outperform	HK$133.77B	22.89	22.73%	2.95%	-17.53%	-8.90%
Sector *	63 Neutral	$16.67B	10.96	-6.97%	3.00%	1.72%	-24.21%
1788	47 Neutral	€44.94B	129.95	2.31%	0.84%	37.06%	72.51%

Luk Fook Holdings (International) Corporate Events

Luk Fook Holdings Reports Mixed Q4 FY2025 Results with Strategic Shifts

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

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.