Chow Tai Fook Jewellery Group Stock

Good evening, ladies and gentlemen. I'm Heidi, MC of today's event. Welcome to the Investor and Analyst 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 Ms. Danita On 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 will be provided to you. Online participants have 2 options available. You can select English or Mandarin interpretation in 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-on-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 5 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 sustained 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 '26 was attributable to enhanced desirability brought by our 5 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 brand 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 3 growth levers that we call the 3 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. So 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 collections, such as the newly launched DAWN Collection, our flagship store and our high jewelry 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 touch point. And you saw this in our upgraded store formats, delivering higher productivity.

Reimagine new horizons. We will extend into new geographies, channels and categories, weaving jewelry into luxury lifestyle across markets where demand for what we offer is strong and growing. And 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 3 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, Macau as well as international markets. We are 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 in 8 newly designed stores as of the end of FY '26. And newly designed stores like these are generating significantly higher productivity, which was 8 to 10x the average same-store productivity. Coupled with the strategic store openings in high footfall locations, the average monthly sales per store in these newly designed format saw a strong growth of 57% in FY '26. And 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 '26.

And going forward, we will continue to open newly designed luxury format stores in prime locations, 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 3 collections contributed close to HKD 10 billion to our RSV and our iconic HUÁ Collection contributed HKD 43 billion to our RSV in FY '26.

In recent years, we have seen growing interest in traditional Chinese jewelry inspired by heritage. However, it becomes hard to differentiate one brand from another, leaving a clear gap in the market for jewelry with new Chinese style, one with modern design, cultural meaning and fine craftsmanship. And 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 jewelry as a form of self-expression.

And since launch, the DAWN collection has delivered remarkable performance with RSV exceeding HKD 500 million by the end of May, only over a little over 1 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. It's 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. So 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 jewelry RSV mix in Chinese Mainland expanded to 35.4% in FY '26. And by FY 2030, our goal is that we expect fixed-price jewelry mix will further expand to 45% to 50% as part of our centennial goals. So during the financial year, we have also extended our portfolio beyond jewelry into lifestyle, launching Chow Tai Fook Home, our new home décor line that weaves jewelry aesthetics into daily living. We collaborated with a renowned French porcelain house Bernardaud. We launched 2 tableware collections available in selected stores.

And through our CTF Accessories line, including gold AirPod 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 stores 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 jewelry brand to stand alongside global luxury brands. And 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.

So looking ahead, we expect to deepen our presence in Southeast Asia and North America, while targeting to Middle East markets in the next 2 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 AAA 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%. And among the customers who purchased our IP collaboration such as Disney, Blind Box, Chiikawa and NBA, approximately 35% to 55% are new members who are primarily the younger generation. So the IP collaboration serves 2 purpose. One, they're expanding our customer base; and two, they're building a younger contemporary brand image for a company that's approaching 100 years old.

So IP collaboration addresses one end of our customer spectrum. Our high jewelry collection addresses the other end. We are the only Chinese brand offering high jewelry, and our debut collection launched 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 jewelry 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. And 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 jewelry 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 delivered solid results. Our focus going forward will be on sustaining and extending the momentum that we have created.

Thank you. And now let me hand over to Kent, who will take you through our business performance in more detail.

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 store in prime, high footfall location. As a result, network size has become leaner and smaller, while network quality has been improved. During the financial 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 '27, 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 '26 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 store with a focus on elevating retail experience and desirability. As of March 2026, we operate 8 of these stores in the Mainland. The newly designed luxury format stores has consistently outperformed, delivering significant higher productivity, which was 8 to 10x the average same-store productivity, a clear testament on our transformation success.

In addition, we also selectively opened store 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 store reached approximately HKD 1.6 million, shooting by 57% from a year ago, a key driver of future productivity uplift.

In the midterm, we are focused on 3 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 transition 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 8 in FY '26 to target at 50 by 2030.

And third, the continued 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 store in the Chinese Mainland in FY '26. 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 3 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 the deployment of AI live hostesses, 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 members 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 tailored for e-commerce exclusive channel to capture incremental gold demand. Beyond the Mainland, we will further partner 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 jewelry design and creation to the world.

Now let's turn to Hong Kong, Macau 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 rebounded strongly across key markets in Hong Kong, Macau and other markets during the year, supported by solid tourism revival and enhanced retail experience. To deliver a compelling and differentiated experience across target customer segments, we enhanced visual merchandising and in-store presentation. A valid example is our global flagship store on Canton Road, which brings 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, and as highlighted earlier by Sonia, we strengthened our presence and visibility in luxury destination during the year. Our other markets business delivered RSV growth of over 50% during the year. In FY '27, we plan to unveil newly designed store in select high potential markets, including Southeast Asia and North America. And most recently, we expand our footprint in Canada with a new store in a world-class lifestyle hub, Oakridge Park in Vancouver.

We are also adding on new market for international expansion such as the Middle East, to target our ambition to redefine 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 stores in prime location of high potential market by FY 2030.

This concludes my part for today. I would like to 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, Macau and other markets delivered 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 jewelry delivered strong and consistent performance, growing 16% for the year and remaining a key driver for overall revenue. Weight-based gold jewelry rebounded meaningfully in the second half, returning to 9% growth, supported by robust demand in Hong Kong, Macau 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 3 quarters of FY '26 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 jewelry products. Fixed-price jewelry ASP rose sharply, up 42% in the Mainland and 58% in Hong Kong and Macau, 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 Macau and 20% in the Mainland. Elevated brand desirability has translated into a strong start in FY '27, 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 jewelry 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 Macau. The staff cost ratio remained stable at 5.1% in the Mainland, while declining 260 basis points to 8.3% in Hong Kong and Macau, 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 Macau, 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, Macau 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 grow investments and balance sheet strength. Return on equity reached 28.4% in FY '26, driven by significant expansion in net profit margin to 9.6%, marking sustained improvement versus the 5-year historical average. The group is confident that medium-term ROE will remain above 25%, supported by execution of transformation initiatives.

In summary, FY '26 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 the 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 lowered to 39% at the 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 fiscal year '25 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 '26 and in FY '27 to date. We are now entering the definitive phase of our multiyear transformation journey towards our centenary in 2029.

From FY '27 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 of our sustainable growth in the long run.

This concludes my presentation today. Thank you.

Thank you.

Good evening, ladies and gentlemen. I'm Heidi, MC of today's event. Welcome to the Investor and Analyst Presentation of Chai Tai Fook Jewelry Group Limited to discuss our interim results for the financial year 2026.

Let me introduce the management team who will be presenting and participating in the Q&A session today. They are Mr. Kent Wong, Managing Director; Mr. Hamilton Cheng, Executive Director; Ms. Karen Yih, Chief Financial Officer; and Ms. Danita On of Investor Relations and Corporate Communications.

Firstly, Mr. Kent Wong will present the highlights of our interim results, share group strategies and provide business updates. Next, Ms. Karen Yih will deliver the financial review. Following that, Mr. Hamilton Cheng will discuss capital management and conclude the presentation with market outlook. After the presentation, we will open the floor for a Q&A session.

This hybrid event will be conducted primarily in English. Simultaneous interpretation will be available for any content or questions addressed in Mandarin. For on-site participants here at Hong Kong CEC, who require translation services, please raise your hand and a headset will be provided. On-site (sic) [ Online ] participants may select either English or Mandarin interpretation using the Language Bar located at the top right corner of the webcast platform.

Now, I would like to hand over to our first presenter, Mr. Kent Huang.

Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us for our interim results for FY '26. In the first half of FY '26, the group demonstrated remarkable resilience and delivered solid results, supported by our improvement in consumer sentiments and a revival in jewelry spending across the group key market.

We stay agile in response to the changing environment while diligently executing our 5 strategic priorities: brand transformation, product optimization, accessory digitalization, operational efficiency and talent cultivation. Our strategic initiatives continue to support our operational and financial resilience.

Despite the gold prices shot in the period, the gross revenue in FY '26 first half year remained stable at HKD 39 billion. With an improved product mix and the group price appreciation, our gross profit margin remained steady at a relatively high level in history, about 30%. Coupled with disciplined cost and capital management, operating profit margin expanded to 17.5%, marking a 5-year high record.

Operating profit was resilient, rising 0.7% year-on-year. Profit attributable to shareholders amount to HKD 2.5 billion. That's a similar level compared to the same period last year. The Board had declared an interim dividend of HKD 0.22 per share, equivalent to a payout ratio of 85.7%. We are confident in our ability to deliver long-term sustainable and stable return to our shareholders.

We are pleased to see steady progress in our brand transformation. I would like to highlight some of our key achievements in the first half. We remain focused on optimizing product offerings and expanding our signature collections, building on the success of the Rouge Collection, the Chow Tai Fook Palace Museum Collection.

In April, we launched Joie Collection, featuring a Chinese [ Hey ] motif, which effectively resonate with younger consumers. A cornerstone of our brand transformation is to redefine the retail experience through our new image stores. In the first half, we unveiled new image stores in Beijing, Shijiazhuang and Macau. This premium positioned store successfully elevate our brand desirability and deliver higher store productivity.

In June, we unveiled our new high jewelry collection, Timeless Harmony in Hangzhou, honoring our near century of craftmanship and cultural legacy, designed by our Creative Director, Nicholas, with inspiration drawn from classical Chinese philosophy and architecture. The collection exemplify our originality, exquisite design and unmatched craftmanship by pairing with rare gemstone with refined artistry.

It reinforced our brand positioning and aspiration and reflect our enduring commitment to showing the world the beauty of Chinese through our exclusive jewelry. During the period, we underscored our dedication to sport excellence as the sponsor and design lead to the official medal of the 15th National Games. This reflects our commitment to national sports and the artistic excellence of jewelry into the world of sports.

We are thrilled to see fixed price jewelry contribution to RSV increase to nearly 32% during the period, more than 4 percent points higher than 1 year ago, lending support to our gross profit margin. The 3 iconic collections we launched since the embarkment on our transformation journey.

Chow Tai Fook Palace Museum Collection together with Rouge and Joie have continued to yield positive outcomes. The fixed price collection achieved total sales of about HKD 3.4 billion in the first half, representing nearly 50% year-on-year growth. Here is a recent video of the Chow Tai Fook Palace Museum new collection to mark the museum's 100th anniversary, demonstrating our refresh strategy to build relevance and foster deeper connection with new consumer. Please enjoy.

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As we advance towards our centenary in 2029, brand transformation, we continue to build positive momentum and drive quality growth. We remain focused on enriching our differentiated synergy collection and products. We will continue to expand strategic IP collaboration as a key focus of our product strategy to engage with younger audience.

More new image stores will be rolled out in our existing and new markets. As a teaser of what is to come, we will celebrate the opening of our new landmark flagship store on Canton Road in Tsim Sha Tsui next year to show our heritage, vision and creativity. We will give further update on this in due course.

Our high jewelry initiative is central to elevating our brand positioning. Beyond the luxury market, we will leverage it to enhance our brand desirability in our key markets and set a new benchmark of excellence in the broad mass market to deliver a positive impact to our core business.

So now update our business. In store management, our priority remains to sustain market leadership and strengthen network resilience by closing underperforming stores and launching a higher productivity store in prime location. The store optimization strategy has proven effective in improving our overall productivity of our retail network, enabling us to deliver higher quality earning.

In the first half, we selectively opened 57 new stores in the Mainland with key opening centered around higher-tier cities. We also closed 668 stores as part of our store optimization efforts, leading to a net closure of 611 stores during the period. As of September, we had approximately 5,700 Chow Tai Fook Jewelry stores in the Mainland, of which about 73% are of the franchise model.

As a result of store network optimization, stores in higher-tier cities demonstrate a superior performance to those in lower-tier cities in the period, mainly due to a better recovery in the consumer demand and fewer store closure than lower-tier cities. RSV growth in Tier 1 city reached nearly 9% during the period.

As we transition to high-quality expansion, we have prioritized store productivities and earnings quality. Our approach is to selectively expand into premium shopping malls and premium locations, therefore, accelerating our brand transformation and elevating brand desirability. This strategy is already achieving positive results.

Our new store on average is generating more than 1.3 million monthly sales. We witnessed a notable improvement in store productivity by over 70%. We expect the productivity of the new stores on an annualized basis would achieve a higher level as second half revenue will be higher than first half due to the seasonality of festival demand.

As mentioned earlier, we added 2 new image stores in Beijing and Shijiazhuang targeting a sophisticated Asian consumer with differentiated merchandise and redefine retail experience. Together with the new image stores we opened last year, we are pleased to see these new format stores have consistently delivered higher monthly sales than average store in the same district since relaunch.

We continue to enhance digital engagement to grow our brand desirability among younger generation. Mainland e-commerce delivered a strong RSV growth of 28% in first half '26 FY, contributing approximately 7% to retail sales value and over 16% to the volume of our Mainland business. Notably, both CTF Mall and Douyin delivered more than 40% RSV growth during the period.

E-commerce ASP increased to 3,000 versus 2,400 a year ago. We proactively harnessed the potential of live streaming channel through enhancement in content curation, host collaboration and real-time consumer engagement, which contribute almost 18% of our online sales in this period.

During first half FY '26, we curated popular IP collaboration such as CLOT and Chiikawa with a focused strategy to engage younger consumer through diverse and interactive social media content. Refreshed marketing approach coincide with major online shopping festival, creating the evolving interest of online consumers. As a separate update, during the recent Double 11 festival, our e-commerce RSV grew by more than 30%.

Now, let's turn to Hong Kong, Macau and other markets. Our business rebounded across all these geographical markets during first half FY '26. Hong Kong, Macau experienced steady recovery, supported by revised retail sentiment and increased foot traffic. Macau outperformed Hong Kong with a 17% RSV growth. In line with the group's store optimization strategy, we continue to refine our POS location to site market opportunities and seek margin resilience across this market. Our retail network in Hong Kong and Macau remained steady at 88 Chow Tai Fook Jewelry stores as of September.

In our drive to continually enhance the retail experience, we opened a Rolex boutique in K11 MUSEA in Hong Kong and a new image store and 2 HOF stores in luxury casino resort in Macau in the period. We will continue to enhance visual merchandising experience, retail excellence across our stores in Hong Kong and Macau according to growth brand transformation.

In other markets, RSV grew by 17% in the first half. Excluding China duty-free shops, RSV of Chow Tai Fook Jewelry Store grew by 12%, mainly attributable to strong growth in Singapore and Malaysia, validating our strategic expansion priority in this region. Our continuing brand transformation underscore our ambition to redefine global luxury and vision to be the leading global jewelry brand. That is the trusted lifetime partner for every generation. Thus, expansion into broader international market is seen as a next chapter of our growth.

We deploy a 2-pronged expansion strategy with a sharp focus on quality and store productivity. We continue to revisualize key existing markets by optimizing visual merchandising to enhance store productivity and product mix. We have strengthened training for our storefront staff to elevate retail experience. With our initiative on upgrading store and rezoning, we are encouraging to see notable same-store growth improvement by almost 30% in Singapore and Malaysia in the period.

On the other hand, we are proactively exploring new high potential territory for sustainable growth. We target markets with good potential long-term prospects while looking for prime location in line with our aspiration. Beyond Southeast Asia, we will initially expand into Oceania and stay agile to identifying other new markets with high potential, capturing rising demand from affluent local customer and outbound Chinese customer.

By June 2026, we will launch 6 new stores in international market, including new image store. All the new stores are strategically located in prime retail area, known for high foot traffic, ensuring strong brand visibility and brand reach among both tourists and local shoppers.

In Southeast Asia, we unveiled our first new image store in Jewel Changi Airport, Singapore. More new stores will be rolled out in international market. In next 2 years, we will further expand our presence in new markets such as Middle East.

This concludes my part of today's presentation. I will pass it to Karen for financial performance.

Thank you, Kent. I'm very honored to do my first earnings release for Chow Tai Fook Jewelry Group.

Let me begin the financial review with the key financial metrics and ratios. In the first half of the financial year, we demonstrated sustained strategic progression and operational resilience. Our revenue remained stable at HKD 39 billion, reflecting steady business recovery. The gross profit margin maintained a robust position above 30%, underpinned by enhanced product mix optimization, increased retail channel contribution and favorable gold price appreciation.

We continue to enhance operational efficiency, achieving a 120 basis point improvement in our SG&A ratio, while expanding operating profit margin to 17.5%, our strongest performance in 5 years. This robust outcome demonstrates our successful execution of our store optimization initiatives and vigorous expense discipline, reinforcing our strategic focus on delivering sustainable earnings quality and maximizing shareholders' value through operational leverage.

Chinese Mainland operation registered a 3% revenue contraction in the first half, primarily attributable to network rationalization initiatives, though partially mitigated by positive same-store sales growth. The region maintained its position as the group core market, representing 83% of consolidated revenue. Retail segment demonstrates superior performance relative to wholesale operation, driven by strengthened consumer demand and enhanced operational execution.

In response to evolving market dynamics and growing consumer preference for higher-margin fixed-price products, we have implemented a strategic product segmentation framework, effective this reporting period. On the right-hand side of the slide, you can see our portfolio is now classified into 3 distinct categories: fixed-price jewelry displayed in red includes fixed-price gold products, gem-set jewelry and Platinum and K-Gold offerings, representing our highest margin category aligned with shifting consumer preferences.

Weight-based gold jewelry displayed in blue, traditional gold products sold by weight, maintaining our heritage positioning in the core gold segment. Watch business, displayed in yellow, our timepiece portfolio complementing our jewelry offerings. This refined categorization enhanced visibility into margin dynamics and enabled more targeted strategic resource allocation, positioning us to capitalize on the structural shift towards fixed price product while optimizing our overall product mix for profitability.

We are pleased to report improving momentum in our weight-based gold jewelry with revenue decline narrowed substantially during the period, reflecting strengthening retail sentiment and consumer confidence. Our fixed price jewelry achieved a robust 9% growth in all product category in the first half. This exceptional growth trajectory was driven by sustained demand for our signature collections, validating our strategic brand elevation initiatives and demonstrating successful execution of our premiumization strategy. The outperform on these higher-margin offerings reinforces our conviction in the brand transformation journey and position us favorably for margin expansion.

In the first half FY '26, we've achieved positive same-store sales growth across our key markets and product categories. This performance is a direct result of our targeted store optimization, sustained demand on our signature collections and improving trajectory of weight-based gold products. Our third quarter-to-date performance covering the period from October 1 to November 18 demonstrates accelerated same-store sales momentum, reaching double-digit growth. This robust performance reinforces our confidence in a sustained recovery through to the second half of the fiscal year.

Average selling price, ASP, reviewed notable resilience across product categories in both Chinese Mainland and Hong Kong and Macau markets. Within fixed price jewelry, ASP of fixed-price gold jewelry, including gold jewelry and gem-inlaid gold jewelry rose by 19% and 25% in the Mainland and Hong Kong and Macau, respectively. This was driven by strong demand of our key fixed-price signature collections and gold price appreciation. Gem-set ASP increased by 8% in the Mainland, while maintaining at a stable level in Hong Kong and Macau.

Our gross profit margin dynamics reflect strategic portfolio optimization with a higher retail mix and higher-margin product composition, contributing 150 basis points of expansion. Despite a 260 basis point margin compression, driven by gold price variation and timing, our deliberate shift towards fixed price products and enhanced retail channel mix demonstrates resilient margin management. This performance underscores our agile approach to navigating market volatility through strategic product and channel positioning.

Through store network optimization and vigorous cost discipline, we achieved a 9% reduction in SG&A expenses during the first half. Riding on improved business recovery and operating leverage, we compressed the SG&A ratio by 120 basis points to 14%. Our forward-looking cost management approach remains focused on maintaining disciplined discretionary spending while preserving organizational agility. We are committed to maximizing return on every operating dollar invested with a targeted full-year SG&A ratio at 13.6% to 13.7%.

We remain committed to strategic talent development while driving operational efficiency across our workforce. In Chinese Mainland, staff costs decreased by 4% with a 6.7% reduction in fixed compensation, aligned with headcount optimization, and a 2.5% increase in variable compensation, reflecting retail revenue growth.

In Hong Kong and Macau, we achieved a significant 10% reduction in staff cost with a 37% decline in variable compensation resulting from a refined incentive structures. The staff cost ratio improved substantially by 270 basis points, driven by revenue expansion and disciplined compensation management.

In Chinese Mainland, we achieved improvement in concession and lease-related expenses. Concessionary fees ratio enhanced by 10 basis points through fee structure optimization. Lease-related expenses ratio improved by 100 basis points, leveraging business recovery and operating scale.

In Hong Kong and Macau, rental expenses increased with revenue growth, maintaining variable cost alignment. Lease-related expense ratio compressed by 40 basis points through operating leverage on fixed rental components. Our lease renewal strategy in Hong Kong and Macau demonstrate proactive cost management. Approximately 1/3 of our lease contract will be under renewal in FY '26 and average lease renewal reduced by mid-teens in the first half.

Our operating performance demonstrate resilience with Hong Kong, Macau and other markets delivering over 50% of operating profit growth. The exceptional margin expansion is driven by elevated fixed price jewelry sales and enhanced retail mix, uplifting gross margin reaching 36%. Operating margin expanded 470 basis points to 16.3%, underpinned by disciplined cost management and operational efficiency.

Chinese Mainland experienced a 170 basis point gross margin compression due to gold price dynamics and increased business of pre-owned gold for trade-up and upgrade. We maintained robust profitability through higher fixed price jewelry mix, enhanced retail mix and disciplined cost management. Our operating margin sustained at 17.7%.

In first half FY '26, we've executed a disciplined approach through inventory management and capital allocation, driven by operational efficiency and cash flow optimization. Inventory balance was reduced by 7% to HKD 63 billion. Inventory turnover period compressed by 33 days. This is achieved through proactive managing in-store revenue inventory composition and recycling aged and discontinued products. CapEx was controlled at HKD 227 million in the first half, and we will expect full-year guidance of CapEx remaining below 1% of revenue for FY '26.

This concludes my presentation. I will pass the time to Hamilton, who will discuss capital management.

Thank you, Karen. We effectively managed our capital structure to ensure financial stability and source financial capital to fuel business growth. Our cash balance increased to around HKD 10 billion as of September.

Based on business seasonality, we stock up our inventory by September to prepare for the peak season. Against the backdrop of gold price hike in the first half, more working capital is required reserved for inventory replenishment. We funded this through bank borrowings and the convertible bond. In June, we seized a good window and successfully issued a convertible bond at a very low coupon rate. As of September, the straight bond portion that was booked under debt stood at about HKD 7 billion. As a result, net gearing ratio ascended to 83% in the period. Excluding gold loans, this ratio would be around 12%.

Now, let's turn to our cash flows. Our business operation remains resilient, generating about HKD 8 billion net cash inflows in the period. Here follows the key uses of cash relating to operations. About HKD 7 billion was used to finance inventory procurement ahead of the expected festival demand in the second half. About HKD 4 billion was used for other operating activities, including repayment of inventory deposits to franchisees, tax payment and movements in receivables and payables. As a result, pro forma free cash flows was negative HKD 4 billion for the first half.

We leveraged external capital at a relatively low cost to meet the business needs. Net proceeds from the convertible bond and additional bank borrowings combined to bring in a net HKD 11 billion. As of September, our cash balance stood at over HKD 10 billion. With revenue being more back-end loaded in the second half, plus our confidence in gradual business recovery, we expect the cash flow generation will strengthen to sustain our business growth and dividend returns to our shareholders.

Now, let's take a review on gold loan impact on the financial results during the period. Gold price appreciation would normally put some pressure on the demand, but at the same time, it provides support to our gross margin, which was reflected in the GP margin analysis by Karen just now. And gold price fluctuation gain accounted for around 7.9% of the group's revenue in the period.

On the other hand, gold price increase incurs fair value loss on gold loans, which represented 8.1% of the group's revenue in the period. The loss would be usually offset by gold price fluctuation gain or there may even be a marginal gain.

During the period, we have been striving for managing the inventory turnover and hedging ratio, and hedging ratio stood at 55% as of September, while the fair value loss on settled gold loans dropped notably by over 20%, incremental loss on unsettled gold loans incurred on the back of gold price surge in September. This resulted in an overall loss on gold loans, marginally higher than gold price fluctuation gain in the period. Nevertheless, profit before tax remained resilient at similar level in the first half last year.

Lastly, market outlook. Continued improvement in consumer sentiment revived jewelry spending in the first half fiscal year '26, and we witnessed solid business recovery as same-store sales returned to positive in all key markets which we operate. Despite the recent short-term industry headwinds, our quarter-to-date same-store sales performance remained solid. Together with our transformation initiatives that have strengthened our operational and financial resilience, we remained confident in sustaining our recovery through the second half this year.

We shall remain agile, proactively refining our strategies to stay ahead in a dynamic environment. Rigorous financial discipline, coupled with prudent cost and capital management, we continue to underpin our pursuit of sustainable high-quality earnings and long-term shareholder value.

As we approach our historic centenary, we remain resolutely committed to advancing our brand transformation agenda through strategic initiatives designed to deliver positive outcomes.

Thank you. This concludes our presentation today.

Thank you, management.