Citi Research raised its target price for Luk Fook Holdings (00590) to HK$25.1 from HK$22.9 and maintained its "buy" rating.
The research house said Luk Fook's HK & Macau SSSG deteriorated to -39% in 2Q FY2020 (from -10% in 1Q), due to high base, gold price surge (since mid-June) and protest in HK (since mid-Jun). Mainland China SSSG of self-operated stores deteriorated to -25% in 2Q (from -7% in 1Q), due to high base plus weak sentiment in connection with the trade war.
For the first two weeks of October, HK & Macau SSSG further declined, but Mainland
China SSSG saw improvement for both self-operated and licensed stores.
Citi adjusted its FY2020/21/22 SSSG forecast to -26%/-6%/0% (from -23%/0%/0%) for HK & Macau and to -7%/0%/0% (from -2%/0%/0%) for Mainland China, and hence revised down its net profit forecasts by 7%/11%/10%.