Luk Fook Hold surges 4.6% on 80%-90% profit beat, Goldman keeps Neutral

Luk Fook Hold said FY2026 profit will jump 80%-90%, beating expectations on margin gains from gold price tailwinds and VAT changes.

"The earnings beat was primarily margin-driven, supported by both structural and one-off factors," Goldman Sachs said in a note.

The jeweler's stock rose 4.6% to HKD21.44 at midday, after touching a session high of HKD22.44. Volume reached 1.995 million shares, with HKD43.6 million traded. Short selling accounted for HKD2.21 million, or 5.1% of turnover.

The profit alert signals that Luk Fook is capturing margin benefits from rising gold prices and a shift toward fixed-price products. But Goldman warned that gold price trends will remain a key source of margin volatility going forward.

Goldman attributed the beat to an increased mix of fixed-price products and same-store sales growth-driven operating leverage. One-off factors included the adoption of the FIFO inventory accounting method, which boosted gross margins amid sharply rising gold prices in FY2026, and a new VAT policy implemented in November 2025 that the company passed on to customers while still benefiting from inventory not subject to the tax on the cost side. The broker estimated the VAT impact translated to a mid-single-digit to high-single-digit percentage benefit in gross margin.

Looking ahead, Goldman said lower-cost inventory is expected to continue delivering margin benefits in the first half of FY2027. However, the trajectory of gold prices will remain the primary source of margin uncertainty.

The company has not yet disclosed full revenue, EPS, or dividend details. Those figures are expected when Luk Fook releases its complete annual results.

The profit upgrade signals that Luk Fook is benefiting from favorable gold market conditions and operational improvements. Investors will watch the full-year results for revenue and dividend details, as well as management's outlook on gold price trends heading into FY2027.

This article is for informational purposes only and does not constitute investment advice.