Chow Tai Fook Shares Rise in Wake of Special Dividend

By Ben Otto

Chow Tai Fook Jewellery Group shares rose early Friday after the company announced a special dividend on the back of fiscal-year results and said it expects recovery in the months ahead.

The Hong Kong-based jeweler's shares were up 6.8% at 14.74 Hong Kong dollars in early trading, trimming year-to-date losses to 7.4%.

Chow Tai Fook said late Thursday that its top line for the year ended March fell 4.3% to HK$94.68 billion (US$12.08 billion) on pandemic effects. Net profit fell 20% to HK$5.38 billion partly due to unrealized losses on gold loans and foreign-exchange losses from a weaker yuan.

The company said it was encouraged by "the gradual resumption of business in our key markets, and expect FY2024 to be a year of recovery and normality."

Chow Tai Fook also announced a full-year dividend of HK$0.28 and a special dividend of HK$0.72.

Citi analysts said the special dividend, "as a payback of the remaining free cash flows during the pandemic, was a positive surprise." The decision "shows good corporate governance" and optimism on the company's outlook, they said in a research note.

Citi kept a buy rating on the shares, citing a recovery trend and an attractive valuation at about 16 times forecast FY 2024 earnings and with about a 9% yield in the year just ended. They trimmed revenue expectations over the next two years, consequently cutting the target price to HK$18.10 from HK$19.50.

Write to Ben Otto at ben.otto@wsj.com

(END) Dow Jones Newswires

June 08, 2023 22:37 ET (02:37 GMT)

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