Chow Tai Fook's revenue soared 63% in 1Q13

Thanks to stellar sales in Hong Kong and Macau.

According to Barclays, Chow Tai Fook reported revenue growth of 63% y/y for 1Q FY14 (ended 30-Jun-2013). By geography, the Hong Kong and Macau market (which accounted for 47% of FY13 overall revenue) recorded 85% y/y revenue growth and the China market (which accounted for 53% of FY13 overall revenue) recorded 45% y/y revenue growth. 

Here's more from Barclays:

By products, gold products accounted for 69% (FY13: 57%), gem-set jewellery 16% (FY13: 23%), platinum/karat gold products 12% (FY13: 15%) and watches 3% (FY13: 5%).

According to company, gold products sales have surged due to a ‘gold rush’ on the sharp decrease (i.e. 12.1% y/y decrease) in gold price during 1Q FY14. Due to a higher portion of lower-gross-margin gold products sales in its product mix, management expects a 3ppt drop in the 1Q FY14 gross margin from FY13 to about 25.4%.

In terms of revenue figure by products, we estimate gold product revenue to grow by more than 100% y/y; platinum/karat gold product revenue to grow by more than 20% y/y; gem-set revenue to grow by more than 10% while watches to decline by more than 15%.

The company's overall same-store sales (SSS) was 48%, comprised of 55% volume growth and a c.5% ASP decline. The Hong Kong and Macau market recorded SSS of 68%, comprised of 81% volume growth and a c.7% ASP decline.

Meanwhile, the China market saw SSS of 32%, comprised of volume growth of 41% and a c.6% ASP decline. By product, SSS for gem-set and gold products were 8% and 78%, respectively, both driven by strong volume growth. In terms of store openings, during 1QFY14 (Apr – Jun 2013), Chow Tai Fook opened a net of 20 stores, which totalled to 1,856 stores as at 30 Jun 2013. Of which, 1,748 (+17 from FY13) were in China and 108 (+3 from FY13) were in Hong Kong/Macau.

Inventory level remains healthy. In particular, overall finished goods inventory turnover improved to 120 days in 1Q FY14, from 170 days in 4Q FY13.