Chow Tai Fook (01929.HK) 2025 Interim Performance and Industry Policy Impact Analysis

Chow Tai Fook Jewellery Group (01929.HK) is a leading jewelry retailer in Hong Kong and the Chinese mainland, with core businesses covering jewelry retail, wholesale, and manufacturing [0]. 2025 interim financial data shows that the company’s revenue was RMB 38.986 billion, gross margin remained above 30%, and net profit attributable to shareholders was RMB 2.534 billion [1]. The dividend policy is positive: the interim dividend is RMB 0.22 per share, up 10% year-on-year, with a dividend payout ratio as high as 85.7% [0]. In terms of same-store sales, mainland franchise and direct stores saw significant growth, while the Hong Kong and Macau markets showed signs of recovery [3].
In 2024, the company was among the five weakest stocks in the Hang Seng Index, with its stock price falling 42.1% [2]. However, in 2025, it showed signs of transformation: its first convertible bond issuance in 14 years, cash on hand exceeding HK$7.5 billion, and free cash flow reaching HK$20.75 billion (a five-year high) [4]. Nevertheless, the new mainland gold tax policy in November 2025 had a major impact on the industry, causing Chow Tai Fook’s stock price to drop 7.7% on the day [5]. Citi estimates that if retail prices remain unchanged, it will have a 26% negative impact on the company’s net profit for the 2026 fiscal year [5].

1. Financial Stability and Transformation Coexist
   : The company’s interim financial performance is stable; the high dividend payout ratio reflects sufficient cash flow, while the convertible bond issuance optimizes the capital structure, showing determination for strategic transformation [0][4].
2. Obvious Market Differentiation
   : The mainland market (especially the franchise model) grew strongly, while the Hong Kong and Macau markets gradually recovered, reflecting the effectiveness of channel layout [3].
3. Policy Risks Highlighted
   : The new gold tax policy has a significant impact on industry profits; leading enterprises need to respond through price adjustments or cost control [5].

• Industry Policy Risk
  : The new mainland gold tax policy may lead to a 7% increase in procurement costs; if costs cannot be passed on, profit margins will be squeezed [5].
• Market Volatility Risk
  : The history of a sharp stock price drop in 2024 shows that the industry has large cyclical fluctuations [2].

• Market Expansion Opportunities
  : The mainland franchise model drives market penetration, and the recovery of Hong Kong and Macau markets brings growth potential [3].
• Capital Operation Space
  : Sufficient cash reserves (>HK$7.5 billion) and free cash flow (HK$20.75 billion) provide support for strategic investments [4].

As a leading player in the jewelry industry, Chow Tai Fook delivered stable interim financial performance in 2025, with a positive dividend policy and significant results from channel layout. However, it needs to cope with profit pressure from the new gold tax policy. The company optimizes its capital structure through convertible bond issuance, and sufficient cash flow provides a guarantee for future development.