July 10 (Bloomberg) -- Chow Tai Fook Jewellery Group Ltd. jumped the most since its trading debut after the world’s biggest jewelery chain posted a 48 percent gain in same-store sales for the first quarter.
Chow Tai Fook surged 13 percent, the biggest increase since the stock was listed in December 2011, to HK$9.16. The benchmark Hang Seng Index rose 1.1 percent.
Jewelers are benefiting from soaring demand for gold products after the price of bullion plunged, with Chow Tai Fook outlets increasing the replenishment of inventories in the quarter. CLSA Ltd. raised its full-year revenue forecast for the company 6 percent, indicating annual sales growth of more than 20 percent, analyst Aaron Fischer wrote in a note today.
“We believe the Q1 results will be very well-received by the market and lead to earnings upgrades,” Fischer wrote.
Sales at Chow Tai Fook outlets that have been operating for at least a year climbed 32 percent in China, and 68 percent in Hong Kong and Macau during the three months ended June 30, the Hong Kong-based jewelery said yesterday. Total revenue rose 63 percent from a year earlier, it said.
Retail sales of gold tripled across China April 15-16 as the price of the metal fell, according to the China Gold Association.
Same-store sales growth for gold products at Chow Tai Fook jumped 78 percent during the quarter, the company said. Gold products will account for 60 percent of group revenue this year, Managing Director Kent Wong said yesterday.
The chain last month reported full-year profit that missed analysts’ estimates amid higher costs and slower consumer spending. Revenue climbed 1.5 percent in the 12 months ended March 31, slower than the 61 percent increase a year earlier.
The company expects sales to increase by “double digits” this fiscal year and sees gradual signs of recovery, Chairman Henry Cheng said in June.
Chow Tai Fook, controlled by Hong Kong billionaire Cheng Yu-tung, is betting China’s expanding middle class will help boost profits. The company plans to add 200 outlets this year, primarily in the third- and fourth-tier cities in China.
To contact the reporter on this story: Vinicy Chan in Hong Kong at firstname.lastname@example.org
To contact the editor responsible for this story: Stephanie Wong at email@example.com