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Demand for Gold in China Lifts Profit at World’s Largest Jeweller

Chow Tai Fook’s profit increased for a second consecutive six-month period as demand for gold products lifted sales.
Chow Tai Fook's 'Reflections of Siem' collection | Source: Chow Tai Fook
By
  • Bloomberg

HONG KONG, China — Chow Tai Fook Jewellery Group Ltd.'s profit increased for a second consecutive six-month period as demand for gold products lifted sales at the world's leading jewelry retailer.

Net income rose 46 percent to HK$1.78 billion ($228 million) in the six months through September, the Hong Kong-based company said in a statement on Tuesday. Revenue climbed 15 percent to HK$24.8 billion.

The results mirror the continued recovery in demand for luxury goods in China after a two-year slump amid a corruption crackdown in the country. Sales at the company’s stores are picking up and more customers are also purchasing its products online as the world’s second-largest economy is on track for its first full-year acceleration in seven years.

In the period, retail sales of Chow Tai Fook in mainland China increased 16 percent, and 13 percent in Hong Kong and Macau. Growth momentum was fueled by gold products, the company said.

“FY2018 will be a turning point for our business given the nascent jewelry market recovery,” the company said. “Although the recovery is gradual and mild, the industry is expected to return to a stable yet sustainable growth.”

Shares of Chow Tai Fook have climbed 48 percent this year, compared with the 36 percent gain in the benchmark Hang Seng Index. The results were announced after the close of trading.

Demand for jewelry, watches and clocks, and valuable gifts has been picking up. Sales of these products in Hong Kong rose 4.3 percent this year through September, compared with a 17 percent plunge in all of 2016. Luxury-watch retailer Hengdeli Holdings Ltd. said this month it’s boosting orders for the upcoming Chinese New Year, expecting stronger demand from shoppers in Hong Kong.

Tourists from mainland China, who account for more than three quarters of arrivals to Hong Kong, grew in the nine months through September. With more Chinese tourists likely to travel to Hong Kong next year as the yuan strengthens against the Hong Kong dollar, retailers are poised to benefit from the rise in store sales and falling rents, according to Catherine Lim, an analyst at Bloomberg Intelligence.

By Corinne Gretler and Daniela Wei; editors: K. Oanh Ha, Subramaniam Sharma and Sam Nagarajan.

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