Nomura raised its target price for Luk Fook Holdings (00590) to HK$23.7 from HK$20.9 and maintained its "neutral" rating.
The research house said Luk Fook's overall SSSG for 3Q FY2020 improved to -25% from -37% in 2Q, of which Hong Kong/Macau and China SSSG were at -27% and -12%, respectively (versus -39% for HK/Macau and -25% for China in 2Q).
For the first two weeks of January 2020, Luk Fook's HK business saw a narrowing decline in SSS, and the China business, both self-operated and licensed shops, reported positive growth. Nomura believes this was due to a much earlier Chinese New Year this year, which likely stimulated purchases in early January.
Nomura lifted its earnings forecasts for FY2020-22 by 1-3% to reflect better sales and more benefit from rental reductions.
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