Good evening, ladies and gentlemen. I'm Heidi, MC of today's event. Welcome to the investor and analysts' presentation of Chow Tai Fook Jewellery Group Limited to discuss our annual results for the financial year 2026. To begin, let me introduce the management team who will be leading today's presentation and participating in the Q&A session today. They are Mr. Conroy Cheng, Vice Chairman, Ms. Sonia Cheng, Vice Chairman, Mr. Kent Wong, Managing Director, Mr. Hamilton Cheng, Executive Director, Ms. Karen Yih, Chief Financial Officer, and Mr. Dieter Ong of Investor Relations and Corporate Communications.
This event will be conducted primarily in English. We will provide simultaneous interpretation services for any content or questions answered in Mandarin. For on-site participants requiring translation assistance, please raise your hand and a headset we provide to you. Online participants have two options available. You can select English or Mandarin interpretation in the language bar located at the top right corner of the webcast platform. Now, I would like to hand the time over to our first presenter, Ms. Sonia Cheng, please.
Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us today. I'm delighted to share that Chow Tai Fook delivered a record-high performance in FY 2026 as our brand transformation continues to bear fruit. Revenue year-over-year grew 5.3% to over HKD 94 billion. Our operating profit rose by 27.8% to nearly HKD 19 billion. Most importantly, we achieved a record-high profit attributable to shareholders of over HKD 9 billion, a strong growth of 52.2%.
Adding to that, our operating profit margin reached 20%, up 3.6 percentage points from the previous year, to its highest level in the last five years. What makes these results particularly pleasing is the context in which they were delivered. This strong operating performance was delivered against macroeconomic and geopolitical uncertainties in a year that saw significant gold price volatility throughout, reflecting our confidence in the business outlook and our commitment to sustain shareholder returns.
The board has proposed a final dividend of HKD 0.45 per share, bringing the full-year total to HKD 0.67 per share, a payout ratio of 73.4%. Our vision is to bring Chow Tai Fook to the world stage, and our record-high performance has demonstrated that we are one step closer to our vision. Our strong performance in FY 2026 was attributable to enhanced desirability brought by our five strategic priorities: brand transformation, product optimization, accelerated digitization, operational efficiency, and talent cultivation.
These strategic priorities are powered by a customer-centric approach, and central to our growth strategy going forward will be the brands, experiences that we could create, the products we curate, and the global footprint that we build out. Everything we do is anchored in our customers, and we will be organizing it around three growth levers that we call the three Rs.
Redefining Chinese luxury globally, rejuvenating our portfolio and operational efficiency, and reimagining new horizons. These are not aspirational goals. They are the clear operating logic that underpins everything you have seen in our results today. What do these levers of growth deliver in more depth? Redefining Chinese luxury globally. We will redefine Chinese luxury globally to showcase the contemporary Chinese culture, innovation, and exquisite craftsmanship to the world.
You saw this in our signature collection, such as the newly launched DAWN Collection, our flagship store, and our high-jewellery launch. We will rejuvenate our portfolio and operational efficiency. We will continue to enrich our iconic, design-led, and higher-margin collections and build brand stickiness. We will also reinforce our store optimization program, securing prime locations, opening high-productivity stores, and raising the quality of customer experience at every touchpoint. You saw this in our upgraded store formats, delivering higher productivity.
Reimagine new horizons. We will extend into new geographies, channels, and categories, weaving jewellery into luxury lifestyle across markets where demand for what we offer is strong and growing. You saw this in our international store openings, expansion into lifestyle categories, and our perfectly cut diamond brand, Hearts on Fire, expanding into Asian luxury markets. The three Rs describe what we have already been doing, which has driven the strong results we are presenting today and supporting the momentum for our next phase of growth. In essence, our brand transformation strategy is an evolution of Chow Tai Fook and how we differentiate ourselves in the global luxury market. We have upgraded our retail experience by curating and opening newly designed stores in the Chinese mainland, Hong Kong, Macao, as well as international markets.
We're particularly proud of our first global flagship store on Canton Road, an iconic luxury destination in Hong Kong. Think Fifth Avenue in New York. In the flagship store, we have featured a one-of-a-kind heritage pavilion to showcase our heritage and industry leadership and our signature gold ginkgo tree that has drawn a lot of customer footfall. The flagship store has generated RSV of close to HKD 60 million per month since its opening in February this year.
In Chinese mainland, we have been operating eight newly designed stores as of the end of FY 2026. Newly designed stores like these are generating significantly higher productivity, which was eight to 10 times the average same-store productivity. Coupled with the strategic store openings in high footfall locations, the average monthly sales per store in this newly designed format saw strong growth of 57% in FY 2026.
To enhance our customer experience, we have also been renovating the other existing stores, and we have seen an uplift of productivity of 15% for renovated stores in the Chinese mainland in FY 2026. Going forward, we will continue to open newly designed luxury format stores in prime location, and we aim to have a total of 50 stores in the Chinese mainland by FY 2030. We will also complete the renovation of all of our POS portfolio by FY 2030, creating an upgraded, cohesive, and distinctive retail experience across our location. This will be our key growth driver going forward. A key strategy to redefine Chinese luxury globally is to build our iconic design-led and higher margin signature collections, a growing portfolio that blends innovation with Chinese cultural heritage.
Since our brand transformation in April 2024, we've launched a series of signature collections such as Rouge, Joie, the Chow Tai Fook Palace Museum Collection, deepening our storytelling around Chinese cultural pride. These three collections contributed close to HKD 10 billion to our RSV, and our iconic HUÁ Collection contributed HKD 43 billion to our RSV in FY 2026. In recent years, we have seen growing interest in traditional Chinese jewellery inspired by heritage. However, it becomes hard to differentiate one brand from another, leaving a clear gap in the market for jewellery with new Chinese style, one with modern design, cultural meaning, and fine craftsmanship. With this opportunity in mind, we launched a game-changing collection, the DAWN Collection, in April this year.
As you can see from the pieces I'm wearing, its design, styling, colors, and craftsmanship are distinctly different from other signature collections and also other competitors. The collection is designed to appeal to younger, discerning customers who seek jewellery as a form of self-expression. Since launch, the DAWN Collection has delivered remarkable performance, with RSV exceeding HKD 500 million by the end of May, only a little over one month of performance. This is outperforming the debut of some of our signature collections previously. We expect full year sales target from this single collection will surpass HKD 2 billion. Beyond sales, these collections are doing something equally important, is acquiring new members and new customers while bringing back those who had stepped away. Among the DAWN Collection customers, over 20% are new customers to Chow Tai Fook.
We are confident that this momentum will continue as we bring more hero collections to the market. The success of our signature collections is a clear indicator of the improving product mix and of the growing resonance of our design-led collections. As a result, our fixed-price jewellery RSV mix in Chinese mainland expanded to 35.4% in FY 2026. By FY 2030, our goal is that we expect fixed price jewellery mix will further expand to 45%-50% as part of our centennial goals. During the financial year, we have also extended our portfolio beyond jewellery into lifestyle, launching Chow Tai Fook Home, our new home decor line that weaves jewellery aesthetics into daily living. We collaborated with the renowned French porcelain house, Bernardaud. We launched two tableware collections available in selected stores.
Through our CTF Accessories line, including gold AirPods cases, smartwatch accessories, and hair adornments, we are embedding Chinese aesthetics into contemporary daily wear moments, which demonstrate the breadth and depth of our category offerings. Another key dimension of our transformation is geographic. We are taking Chow Tai Fook to the world stage deliberately and in high potential markets where we see genuine long-term demand. To capture these opportunities, we opened newly designed store across Southeast Asia and Oceania during the year. In Singapore, we launched our first newly designed store in Southeast Asia at Jewel Changi Airport, targeting discerning travelers. In Bangkok at Siam Paragon, one of the top luxury malls in Thailand, we are the first Chinese jewellery brand to stand alongside global luxury brands.
In Westfield Sydney in Australia, we also opened our first store there in Australia, also a top mall in Australia in Sydney as well, bringing Chinese cultural heritage and craftsmanship to a prime luxury destination. Looking ahead, we expect to deepen our presence in Southeast Asia and North America while targeting Middle East markets in the next two years. Alongside our signature collection, our IP collaborations have been a powerful tool for reaching new audiences, particularly young customers. A collaboration with Black Myth, China's first triple A video game, brought in a significant proportion of male customers, a demographic we had not previously reached at this scale.
This collaboration has attracted over 30% of male customers, which is way more than our average of 22%. Among the customers who purchase our IP collaborations, such as Disney Blind Box, Chiikawa, and NBA, approximately 35%-55% are new members who are primarily the younger generation. The IP collaboration serves two purposes. They're expanding our customer base, and they're building a younger, contemporary brand image for a company that's approaching 100 years old. IP collaboration addresses one end of our customer spectrum. Our high jewellery collection addresses the other end. We are the only Chinese brand offering high jewellery, and our debut collection launch last year was a tremendous success, with more than 200 masterpieces sold. In just a few weeks in Shanghai, coming up in June, we will launch our next new high jewellery collections.
This strategic move takes Chow Tai Fook to the global stage that has long been dominated by the Western luxury houses, leading us to the core of our brand transformation, building the Chow Tai Fook universe. This is where our transformation find its fullest expression. Approaching a century of craft, we are clear that we cannot stand still, and we are building something larger, a universe in which jewellery and lifestyle are no longer separate choices. Rather, our differentiation is our breadth and width of our portfolio, targeting different audiences and creating different growth levers with different type of products.
Signature collections that shape culture, unexpected collaborations that expand our audience, and new categories that extend our reach. Our FY 2026 financial results are strong evidence that our transformation strategy delivers solid result. Our focus going forward will be on sustaining and extending the momentum that we have created. Thank you. Now let me hand over to Kent, who will take you through our business performance in more details.
Okay. Thank you, Sonia. Relating to store network management in the Mainland, we stay focused on sustaining market leadership and strengthening network resilience by closing underperforming stores while strategically opening higher-productivity stores in prime high-footfall locations. As a result, network size has become linear and smaller, while network quality has been improved.
During the fiscal year, we net closed 969 Chow Tai Fook Jewellery stores in the Mainland, with the pace of closure moderating in the second half. As of March, our portfolio of Chow Tai Fook jewellery stores in the Mainland stood at 5,300. Looking into FY 2027, we expect further stabilization in the network. Together with our ongoing store premiumization, our Chinese Mainland RSV is well-positioned to extend growth from FY 2026 level. Here, we want to further substantiate the tangible improvement of store productivities, thanks to our well-executed openings.
Since we embarked on our brand transformation journey starting in 2024, we have been rolling out newly designed luxury format stores with a focus on elevating retail experience and desirability. As of March 2026, we operate eight of these stores in the Mainland. The newly designed luxury format stores have consistently outperformed, delivering significantly higher productivity, which was eight to 10 times the average same-store productivity, a clear testament on our transformation success.
In addition, we also selectively open stores in high-footfall locations, backed by our enhanced visual merchandising, optimized product mix, and elevating retail experience. As a result, we are very pleased to report the average monthly sales of new stores, which approximately HKD 1.6 million, shooting by 57% from a year ago, a key driver of future productivity uplift. In the meantime, we are focused on three growth levers, driving revenue and same-store growth.
The first lever, the newly opened stores, as discussed in the previous slide, has shown initial success in gaining traction and delivering superior store outperformance and productivities. As new stores mature and translates into same-store, we expect they will add further impetus to same-store growth. Second, as we are heading into the core phase of our brand transformation, we expect to accelerate the rollout of newly designed stores. We are on track to grow the luxury format stores from eight in FY 2026 to target 50 by 2030. And third, to continue premiumization and upgrade of the existing store portfolio leading to FY 2030.
As mentioned earlier, we are delighted to see an uplift of productivity by 15% for renovated stores in the Chinese Mainland in FY 2026. With these growth drivers taken together, we are confident to deliver sustainable and meaningful growth in same-store and top-line growth in the next three years. Our e-commerce business in the Mainland delivered robust RSV growth of 23% during the year.
This was well-supported by initiatives such as an in-house live streaming studio and deployment of AI live hostess, which helped enhance customer experience. In particular, our CTF Mall registered significant RSV growth of 48%, driven by target marketing initiatives leveraging the extensive CTF Club member base. We will continue to strengthen partnership with e-commerce platform to broaden traffic acquisition and amplify brand visibility. At the same time, we will also accelerate the launch of investment gold tailor for e-commerce exclusive channel to capture incremental gold demand.
Beyond the mainland, we will further partners with the digital platform in international market to expand our brand reach and cultivate global customer base to capture growth opportunity across markets. This aligns our global vision to showcase the Chinese beauty and craftsmanship while demonstrating our strength in jewellery design and creation to the world. Now, let's turn to Hong Kong, Macao, and other markets.
In line with the Group brand transformation to strengthen brand desirability, we elevate retail experience while expanding our network with high-quality store during the year, further strengthening our presence in prime luxury destination. Our business rebound strongly across key market in Hong Kong, Macao, and other markets during the year, support by solid tourism revival and enhanced retail experience. To deliver a compelling and differentiate experience across target customer segments, we enhance visual merchandising and in-store presentation.
A valid example is our global flagship store on Canton Road, which bring out a unique and immersive brand experience. Looking ahead, we will accelerate strategic store revamp, continue to elevate retail excellence, and capture growth opportunity through expansion and relocation in prime high-potential location. As part of our global vision to expand brand reach and influence, as highlighted earlier by Sonia, we strengthen our presence and visibility in luxury destination during the year. Our other markets business deliver a RSV growth of over 50% during the year. In FY 2027, we plan to unveil newly designed store in select high-potential markets, including Southeast Asia and North America. Most recently, we expand our footprint in Canada with a new store in a world-class lifestyle hubs, Oakridge Park in Vancouver.
We are also adding on new market for international expansion, such as the Middle East, to target our ambition to refine global luxury. Aligned with our Brand transformation and vision, we are optimistic we can double the size of RSV of this segment with a store network of more than 100 store in prime location of high-potential market by FY 2030. This conclude my part for today. I would like pass to Karen for financial review.
Thank you, Kent. Let me start our financial review with our revenue performance. The mainland delivered a solid sequential recovery in the second half, supported by strong retail momentum and moderate store closures, driving approximately 36% half-on-half revenue growth. Hong Kong, Macao, and other markets deliver outstanding performance, underpinned by a strong tourism rebound and enhanced retail experience, with revenue growing 22% year-on-year and approximately 71% half-on-half. Growth was underpinned by continued product optimization and signature collections. Fixed price jewellery delivered strong and consistent performance, growing 16% for the year and remaining a key driver for overall revenue. Weight-based gold jewellery rebounded meaningfully in the second half, returning to 9% growth, supported by robust demand in Hong Kong, Macao, and other markets, bringing full-year growth to 3% and providing additional momentum to the Group's overall revenue.
Same-store sales performance recovered steadily through the first three quarters of FY 2026 before macro uncertainties and gold price volatility introduced mixed consumer behavior in the final quarter. Despite this, full-year same-store sales growth across both markets remained resilient and in line with management expectations. Average selling price held firm across jewellery products. Fixed-price jewellery ASP rose sharply, up 42% in the Mainland and 58% in Hong Kong and Macao, reflecting strong product strategy execution and solid market reception of our signature collections. Quarter to date, same-store sales growth has sustained its recovery momentum, delivering double-digit growth of 41% in Hong Kong and Macao and 20% in the Mainland. Elevated brand desirability has translated into a strong start in FY 2027, and we remain confident of delivering another year of quality growth.
Gross profit margin expanded by 280 basis points, driven by gold price appreciation and our deliberate strategic shift towards retail and fixed-price jewellery growth. Continued optimization of our store network and cost base drove a 1.2% decline in SG&A expenses despite revenue growth, primarily reflecting lower depreciation and amortization on property, plant, and equipment. The SG&A ratio improved by 80 basis points to 13.1%, demonstrating the benefit of operating leverage.
The group remained committed to disciplined cost management with a clear focus on delivering higher return and operational efficiencies. The group continued to invest in talent development and operational efficiency, refining remuneration and incentive structures across Mainland and Hong Kong and Macao. The staff cost ratio remained stable at 5.1% in the Mainland while declining 260 basis points to 8.3% in Hong Kong and Macao, reflecting improved productivity and the benefit of a more optimized workforce structure.
In the Mainland, concessionary fees ratio declined 20 basis points following fee structure optimization, while the lease-related expenses ratio improved 80 basis points, supported by operating leverage from higher revenue. In Hong Kong and Macao, despite increased rental expenses from variable components tied to business recovery and new store opening, the overall lease-related expense ratio improved 50 basis points to 4.5%, demonstrating strong revenue-driven operating leverage.
In the Mainland, operating profit grew 22%, driven by steady transformation and effective cost control. Gross profit margin expanded significantly by 280 basis points to 31.5%, while operating margin reached a record 20.1% up 330 basis points year-on-year. In Hong Kong, Macao, and other markets, operating profit surged 61%, with operating margin expanded 470 basis points year-on-year, reflecting strong business recovery and operating leverage across the segment. Inventory value increased 15% to HKD 64 billion, primarily driven to higher gold prices.
While gold inventory tonnage was reduced by approximately 16%, partially offsetting the increase, inventory turnover stood at 364 days. CapEx remained disciplined at HKD 593 million, representing less than 1% of revenue, reflecting the group's balanced approach to growth investments and balance sheet strength. Return on equity reached 28.4% in FY 2026, driven by significant expansion in net profit margin to 9.6%, marking sustained improvement versus the five-year historical average. The group is confident that medium-term ROE will remain above 25%, supported by execution of transformation initiatives. In summary, FY 2026 was a record year, delivering high record profits and superior profitability, accompanied by solid return on equity, demonstrating the group's commitment and execution capability in driving high-quality return. This concludes my presentation. I will hand it over to Hamilton to walk us through the capital management.
Thank you, Karen. In the year, we effectively managed our capital structure to ensure financial stability while maintaining sufficient capital to support business growth. Our cash balance increased to HKD 8.3 billion as at the end of March. Against the backdrop of rising gold prices, inventory replenishment required a higher level of working capital. We funded this through bank borrowings and the convertible bond issued in June last year.
At the same time, we reduced our hedging position to maintain margin stability, which I will touch on shortly. Overall, net gearing ratio was 54% at the end of this financial year. When excluding gold loans, the ratio remained at low and healthy level of less than 12%. Now, turning to cash flows. Our business operation remained resilient and continued to generate strong operating cash flows of approximately HKD 21 billion in the year.
Key uses of cash relating to operations included around HKD 7 billion for inventory procurement and around HKD 5 billion for other operating activities, mainly relating to inventory deposit repayments to franchisees, tax payments, and movements in receivables and payables. This resulted pro forma free cash flow of HKD 7.8 billion, with cash balance at HKD 8.3 billion at end of the year.
Looking ahead, we are confident the robust cash-generating ability of our business will continue to support sustainable returns to shareholders. Lastly, regarding gold loan impact on our financial results during the year, gold price appreciation would normally put some pressure on demand. However, it also provides support to our gross margin. This reflected as gold price fluctuation gain, which accounted for 10.3% of the group's revenue in the year. On the other hand, higher gold prices resulted in fair value losses on gold loans, which represented 6.6% of the group's revenue.
These losses are usually offset by gold price fluctuation gains and, in some cases, may even result in a marginal net gain. Given the unprecedented volatility in gold prices during the year, a balanced hedging strategy remains essential to managing and mitigating risk. Rather than adopting a rigid hedging stance, we take a pragmatic approach, taking into account factors such as consumer demand, market response to gold price movements, and our inventory and hedging positions.
As a result, the gold hedging ratio was lower to 39% at end of the year, compared with 55% a year ago. Thanks to this approach, fair value losses on gold loans remained broadly in line with FY 2025 levels, despite significantly more volatile gold price movements over the year. Moreover, profit before tax recorded a notable increase, with its percentage to revenue expanding by 3.9 percentage points in the year. Now, I will turn over to Conroy for the market outlook. Thank you, Conroy.
Thank you, Hamilton. The success of our brand transformation strategy is clearly reflected in our resilient financial and operational performance in FY 2026 and in FY 2027 to date. We are now entering the definitive phase of our multi-year transformation journey towards our centenary in 2029. From FY 2027 onwards, we are accelerating the transformation pace and ensuring the precision of our full-scale strategic execution, with a laser focus on elevating brand desirability, enriching customer experience, and strengthening product differentiation.
Despite continuing external volatilities and macroeconomic uncertainties, we remain cautiously optimistic on the markets we operate. We are firmly committed to advancing our transformation agenda, underpinned by the consistent execution across our strategic priorities such as brand transformation, product optimization, accelerated digitalization, operational efficiency, and talent cultivation to redefine Chinese luxury globally, rejuvenate portfolio and operational efficiency, and reimagine new horizons.
At the same time, we will continue to rigorously uphold financial discipline in cost and capital management, driving high-quality growth and sustainable earnings and returns for our shareholders. As we approach our centenary in 2029, we will continue to drive sustainable earnings and deliver long-term shareholder value. Looking ahead, we will focus on delivering above-market revenue growth with a target return on equity of above 25%. We will do this through building high-quality growth and shareholder value. In line with our commitment to long-term sustainability of our business and the planet, we have set a clear target to reduce our greenhouse gas emissions by 50% by FY 2030 from our base year of FY 2024. In essence, we are confident our sustainable growth in the long run. This concludes my presentation today. Thank you.
Thank you