Luk Fook Holdings Intl Stock

Ladies and gentlemen, thank you for standing by, and welcome to the Luk Fook FY 2025/'26 Interim Results Presentation. Please also note today's event is being recorded.

At this time, I would like to turn the conference call over to Ms. Joanne Ho. Please go ahead, Joanne.

Good morning, everyone. I'm Joanne from Luk Fook IR team. Thanks for taking the time to join us today for our financial year 2026 interim results. It's great to have you all here with us. Joining me today is Dr. Kathy Chan, our Executive Director and Group's CFO. Kathy will take you through the interim results. After that, we will move straight into the Q&A session. The call will be conducted in English, and the presentation deck is already available for download on our website.

With that, let me hand over to Kathy for the detailed presentation.

Thank you, Joanne. Good morning, ladies and gentlemen. Thank you for joining Luk Fook's FY 2025/'26 interim results presentation. I would like to start with looking at our financial highlights, followed by financial review and then our future plans and strategies. The details are recorded in the corporate presentation, which has been uploaded to our website.

Let's look at Slide 4 about the financial highlights first. Despite sustained geopolitical tensions and trade uncertainties and clouding the macroeconomic outlook and driving gold prices continued to move upward, the group's performance across all regions remained outstanding. Underpinned by effective product differentiation and sales strategies, with the surge in sales of fixed-price jewelry products, the group's revenue increased by 25.6% to HKD 6.8 billion compared to the same period last year.

In addition, the favorable operating leverage effect lifted the operating profit margin by 1.6 percentage points to 11.4%, thereby boosting the operating profit by 45.4% to HKD 780 million. The group's profitable -- profit attributable to equity holders increased by 42.5% to HKD 619 million. The basic earnings per share rose by 41.9% to HKD 1.05. Proposed interim dividend is HKD 0.55 per share with dividend payout ratio of 52%. There was a net decrease of 174 shops globally, including a net decrease of 173 Luk Fook shops and 1 3DG Jewelry shop.

Next slide shows the movement in operating profits. Benefited from the rise in gold prices and the increased sales mix of fixed-price jewelry products with high gross margin, the group's overall gross margin increased by 2 percentage points to 34.7%. In fact, this gross margin is a record high for both interim and annual results. As a result, the group's gross profit increased by 33.2% to HKD 2.37 billion. The operating expenses increased by 12.4% to around HKD 1.3 billion. Thanks to revenue growing at a faster pace, the group benefited from operating leverage with the TOE ratio improving by 2.2 percentage points to 19.1%. The surge in gold prices resulted in the widening gold hedging losses of HKD 409 million during the period. As a result of all the above, the operating profit rose by 45.4% to HKD 780 million.

Now let's go into the details of our financial performance. On Slide 9, our inventory balance grew to around HKD 12.3 billion as at end of September 2025. The increase was mainly due to the rise in gold products category. Therefore, both the average and closing inventory turnover days increased by over 60 days year-on-year, reaching a total of over 490 days by end of September 2025. However, if comparing to first half of financial year 2025, the average inventory turnover period actually dropped by 14 days. Net borrowings increased by 282% to around HKD 1.1 billion, mainly due to the increase in gold loans. ROE rose by 2.5 percentage points to 9.1%.

Now let's look at Slide 12 for the performance analysis by market. Revenue from the Hong Kong, Macau and overseas market increased by 9.9% to HKD 3.86 billion during the period under review, accounting for 56.4% of the group's revenue. Its segment profit increased by 37.3% to HKD 587 million, accounting for 68.2% of the group's total, while its segment profit margin was 15.2%. The wholesaling business in the Mainland market showed a significant improvement in the first half of the financial year. As a result, revenue from the Mainland market increased by 54.2% to HKD 2.98 billion, accounting for 43.6% of group's total revenue. Its segment profit increased by 118.2% to HKD 274 million, accounting for 31.8% of group's total and its segment profit margin was 9.2%.

Slide 13 shows our revenue and segment profit by business. Retailing business was the main source of revenue of the group. The group's retailing revenue increased by 12.8% to HKD 5.26 billion accounting for 76.8% of group's total revenue. Its segment profit increased by 24.6% to HKD 477 million, accounting for 55.4% of the total and its segment profit margin was 9.1%.

Driven by the group's ongoing efforts to broaden product categories under wholesaling business, coupled with successful product differentiation strategy, the new products achieved incredible sales performance. Therefore, the group's wholesaling revenue significantly rose by 190.6% to HKD 1.12 billion, accounting for 16.3% of the group's total revenue. Its segment profit turned around from a loss to a profit of HKD 108 million, accounting for 12.5% of the total, and its segment profit margin was 9.7%. As the segment margin -- segment profit of wholesaling business included profits from intersegment sales to self-operated shops, if including intersegment sales in the denominator, its segment profit margin would be 4.4%. Licensing income increased by 16.6% to HKD 471 million due to the improved sales in Mainland, accounting for 6.9% of group's total revenue. Its segment profit margin was 58.6%, while its segment profit increased by 15.5% to HKD 276 million, accounting for 32.1% of the total.

Let's look at the profit analysis on Slide 14 now. During the period under review, the average international gold price in U.S. dollar per ounce increased by nearly 91% year-on-year, leading to a decline in gold sales by weight. As a result, sales of gold and platinum products increased by 11% only to around HKD 4.1 billion, accounting for 64.3% of overall sales amount. Its gross margin increased by 2.8 percentage points to 30.3% because of the rise in gold prices. Gross profit from gold and platinum products, therefore increased by 22.3% to HKD 1.24 billion, accounting for 59.7% of the overall gross profit.

On the other hand, the sales of fixed-price jewelry products increased by 67.9% to around HKD 2.28 billion, accounting for 35.7% of the overall sales amount. Nevertheless, due to a significant increase in the mix of wholesaling revenue from fixed-price jewelry products, which has lower gross margin than retailing, gross margin for fixed-price jewelry products, therefore, decreased by 0.5 percentage points to 36.8%. Its gross profit, however, increased by 65.6% to HKD 838 million, accounting for 40.3% of overall gross profit.

Now let's look at Slide 16 for performance in Hong Kong, Macau and overseas market. Retailing revenue from the Hong Kong, Macau and overseas markets increased by 8.9% to HKD 3.7 billion, accounting for 97% of these markets' total and 54.7% of group's total revenue. Its segment profit increased by 17.4% to HKD 491 million, accounting for 83.6% of these markets' total and 57% of group's total with segment profit margin of 13.1%.

Moreover, due to the addition of 5 overseas licensed shops during the period under review, wholesaling revenue increased by 89% to HKD 81 million, accounting for 2.1% of the Hong Kong, Macau and overseas markets' total revenue and 1.2% of the group's total. Its segment profit was HKD 62 million, accounting for 10.6% of these markets' total and 7.2% of the group's total. Its segment profit margin was 76.2%. As the segment profit of wholesaling business included the profit of intersegment sales of self-operated shops, if including intersegment sales in the denominator, its segment profit margin will be 5%.

On the other hand, Hong Kong licensing income increased by 3.8% to HKD 33 million, accounting for 0.9% of these markets' total and 0.5% of the group's total. Its segment profit increased by 5.9% to HKD 34 million, accounting for 5.8% of these markets' total and 4% of the group's total. Its segment profit margin was 103.2%.

Now let's look at Slide 17 for performance in Mainland market. The retailing revenue in Mainland increased by 23.6% to HKD 1.5 billion, accounting for 50.6% of Mainland markets total and 22.1% of the group's total. However, due to segment losses in 3DG's Mainland retailing business as a result of gold hedging losses, the group's retailing business in Mainland recorded a segment loss of HKD 14 million, accounting for negative 5.2% of Mainland market's total and negative 1.6% of the group's total. The segment profit margin was negative 0.9%. Actually, the gold hedging loss, half of the gold -- more than half of the gold hedging losses actually incurred in September 2025. So if the impact of gold hedging losses is excluded, the Mainland retailing business would have recorded a segment profit of HKD 182 million.

In fact, more than -- yes. So for the gold hedging losses because it happens in the later part of the first half period and because 100% of this -- the P&L impact needs to be recorded. But actually, the appreciation of value in the inventory, closing inventory cannot be booked because we have to -- we can only book the profit or the appreciation value of the inventory after it is sold. So most likely, all these kind of hedging losses would be offset by the actual sales in the second half of the financial year. So we are not that worried about the high hedging loss at the moment. So attributed to the expansion of product categories in the wholesale business, coupled with the robust sales performance of these new products, the group's revenue of the wholesale business rose significantly by 203.4% to around HKD 1.04 billion, accounting for 34.7% of the Mainland market's revenue and 15.1% of group's total. Its segment profit was HKD 46 million, accounting for 16.8% of Mainland market's total and 5.3% of the group's total. Its segment profit margin was 4.4%. As the segment profit of wholesale business included profit of intersegment sales to self-operated shops, if including intersegment sales in the denominator, its segment profit margin would be 3.8%.

Licensing income in the Mainland market increased by 17.7% to HKD 438 million, which accounted for 14.7% of Mainland market's revenue and 6.4% of the group's total. Its segment profit increased by 16.9% to HKD 242 million, accounting for 88. 4% of Mainland market's total and 28.1% of group's total and its segment profit margin was 55.3%.

Turning to Slide 19, which shows the breakdown of retailing revenue by region. The group continued to actively expand into overseas market and entered into the Vietnam market for the first time during the period under review. Revenue from the overseas market rose by 58.4% to HKD 482 million, accounting for 9% of the group's recurring revenue, a 3 percentage points higher mix than same period in the prior year.

Slide 20 shows the achievements of our e-commerce business in Mainland. Its revenue increased by 12.1% to HKD 843 million, accounting for 55.8% of retail revenue in Mainland and 16% of the gross retailing revenue with ASP increased by 33.3% to RMB 2,800.

Now let's turn to Slide 26. Even though TOE rose by 12.4% to HKD 1.3 billion, revenue growth outpaced this increase. As a result, TOE to revenue ratio improved by 2.2 percentage points to 19.1% as compared to the same period of last year. And then when you look at the table underneath the bar charts, actually, you can see that the rental expenses overall speaking, actually increased by 8% only in the first half of the period -- the financial year. Actually, we have sent 27 renewals out of 69 shops in first half of financial year 2026 with overall rental decrease of more than 25% in renewal.

Let's turn to Slide 28 for capital expenditure. We did not have any significant capital expenditure in first half of FY '26.

And then now let's look at the group's future plans and strategies. The group has set up its new 3-year corporate strategy starting from FY 2026 with overseas market expansion, market-oriented products and operational efficiency enhancement as its 3 main focuses so as to foster its future business growth.

On Slide 31, you can see that we have significant actually, we have -- we can see significant growth potential in overseas markets. We will therefore continue to allocate more resources to actively expand our global footprint and keep opening new shops overseas. The group entered the Vietnamese market for the first time in the first half of this financial year and currently group's footprint spans 12 countries and regions, with a goal to enter at least 3 additional countries and net add 50 new overseas shops within 3 years from the last -- from this financial year to the financial year ending March 2028. And in fact, although we talk about net addition of 50 overseas shops in 3 years' time, but actually, I hope highly likely that in the next financial year, we would have exceeded this 50 overseas shop addition already. But that means by 2 years' time, we should be able to achieve that target, 3-year target.

So in Slide 32, we -- you can see our network expansion plan and CapEx to FY 2026. We plan to have a net addition of around 20 shops in overseas markets this financial year. So far, we have already opened 8 new shops in the first half. For the Mainland market, we don't have a net addition plan, although we have that in the -- at the beginning of the financial year. But because of the actual situation, we expect there will be a net reduction of around 200 shops for the full year.

And the CapEx budget for 2026 is around $100 million, which will be used for shop openings and plant renovation as well as purchase new equipment for office. And let's look at Slide 37, which covers our second strategy focusing on market-oriented products. So in response to the trend of polarized consumption, we are expanding our focus to both premium and affordable luxury segments. We continue to optimize our product mix, launch concept stores and enhance product in-store merchandising. We'll keep sharpening our product differentiation for telling stronger brand stories and values, planning unique design with cutting-edge craftsmanship, offering personalized customization, launching IP collaboration projects and upholding top quality standards. With efficient product management, we tightly align sales and marketing, but we push hot sellers and grab every sales opportunity to maximize volume. At the same time, we'll stay agile on inventory, fine-tune the product mix and flexibly adjust to whatever the market demands.

Last but not least, Slide 38 shows our third strategy, operational efficiency enhancement. We will boost productivity by streamlining supply chain management, rolling out full automation, big data analytics and AI applications and strengthening product further collaboration with agile project management. We'll also maximize employee productivity by building culture of continuous improvement and innovation, upgrading our training programs and sharpening our performance management system.

Now let's shift to the group's branding and promotion. We have integrated strategies to attract target customers and to foster high customer loyalty. This slide is showing that we -- in order to meet increasingly diverse customer needs, we continue to deepen our multi-brand strategy by building a clearly differentiated brand portfolio that precisely targets different segments. We fully leverage each brand's unique strengths to drive synergies and stronger growth.

On Slide 41, we have invited famous actor Cheng Yi as the global brand ambassador to rejuvenate the brand innovation and tap into his massive worldwide fan base.

On Slide 42, you can see we have our signature collection DiaBling Shimmering Gold feature CNC color radiating finish, 360-degree filigree and precision laser cutting to deliver a stunning multifaceted sparkle on gold. Since launch, it has been extremely well received with total sales exceeding 230,000 pieces.

On the next slide is another signature collection Hulu, which symbolizes fortune and prosperity. We launched a series of promotional campaign with slogan get Hulu at Lukfook truly resonate with consumers and take roots in their hearts.

On Slide 44, Taiwan Fortune Collection another signature line using explicit antique gold craft, mother of pearl inlay and gilt coloring brings traditional culture to life with timeless heritage style gold pieces. We held road shows of Charm of Song Dynasty in Beijing and Dialin in May 2025.

On the next slide, Love is Beauty, a natural diamond collection that has been launched for over 14 years. It has become deeply ingrained in consumers' thoughts. On Slide 46, we further strengthened our leadership in the China-chic category through 3 IP collaborations with Tang Palace Cultural Creation. One of the films Night Banquet in Tang Palace, a top 10 national IP of 2021, was launched in September 2025 with over 140 new products. The other 2 collaborations will roll out in 2026 phase.

Next slide, following the hugely successful 2020 collaboration with the phenomenal film, Ne Zha, we launched a new series titled global Ne Zha 2. On the other hand, we collaborated with San-X for over 10 years to create numerous jewelry products of the Rilakkuma. On Slide 48, for the 24th year, Lukfook Jewelry served as the official sponsor of the crown and jewelry for the Miss Hong Kong Pageant. Lukfook also introduced the Love Yourself collection and limited edition 18K gold diamond crown to strengthen its brand image connection with beauty. We also co-launched new products with X+Q Art founded by renowned Chinese sculptor Qu Guangci.

On the next slide, to celebrate anniversary, we launched a brand-new Fun Net collection of gold jewelry and kickstarted a series of promotions. Slide 50 shows some VIP figures. Our membership base increased 20% to reach over 9 million in first half of financial year 2026, with members contributing 78% of the total retail sales. Member spending in the first half surged 41%.

Slide 50 (sic) [ Slide 51 ] highlights the results of our VIP Thankful Month. We rolled out a series of online and offline incentives that successfully attracted new customers, boosted engagement and drove strong in-store sales. Member contribution to group's retail sales during VIP Thankful Month rose 9 percentage points year-on-year. Over 1 million people engaged with our WeChat Mini program. 126,000 customers checked in at our stores.

On Slide 52, we invited celebrities for short- to long-term marketing campaigns to raise brand awareness and recognition among our customers of different brands and product collections. Slide 53, we organized promotional activities with various reputable partners, including King Pro League, Blue Girl, China Everbright Bank and Starbucks to expand our brand exposure to target customers.

Effective sustainability governance is a crucial factor in driving long-term success of the group. Therefore, we have -- we are committed to integrating ESG principles into our corporate planning and operational decision-making processes. We are honored to have received 12 awards in the first half of financial year 2026. Gold prices hit new highs again starting in September 2025. Although sales were impacted during the first week of September, they began to gradually recover from the second week onwards, indicating that consumers have gradually adapted to higher gold prices. From 1st of October to the first 3 weeks of November 2025, the group continued to report satisfactory sales growth across all markets. Simple sales in both the Hong Kong, Macau and overseas market and the Mainland market recorded double-digit growth. The Mainland market exhibited significant improvement compared to the second quarter of the current financial year, while performance in Hong Kong, Macau and overseas market remained broadly in line with that of the second quarter.

Following the implementation of new value-added tax policies for gold in Mainland, the gold raw material procurement costs have increased, which in turn drove up the cost of gold products. Fortunately, the aforesaid factors did not materially dampen consumer demand for gold products in Mainland. During the period from to 1st to 21st November 2025, overall same-store sales growth in the Mainland markets, covering both self-operated shops and licensed shops, as well as in the Hong Kong, Macau and overseas market continue to achieve double-digit growth. This concludes my presentation. Thank you.

Thank you, Kathy. Now we can move into the Q&A session. Ray, please open the floor for the questions.

[Operator Instructions] Our first question is from Mavis Hui from DBS.

Can I just check on a few questions. First, I actually want to check a little bit further in terms of our double-digit growth in October and November 21st. So is it possible to compare a bit in terms of our November sales momentum versus October in terms of the strength of the double-digit growth?

And my question -- on the second question is that what about our sales momentum by product for November so far, talking about fixed-price gold products, weighted gold products and gem sets overall? And my third question is that given the strong set of interim results, could we check on our latest same-store sales growth and margin guidance for the full year of FY '26?

Maybe I answer the margin queries first. Actually, especially in the Mainland China because of that new VAT policy, actually, we have to increase our selling price quite soon after the new policy became effective. That's why -- actually, for those products, actually, it's before that policy was released. So that means that the cost will be a bit lower because no that additional VAT amount inside. Therefore, in the first few months, I guess first few months after this new policy, actually, we should be able to enjoy an even higher gross margin than before because of that -- because of the low cost. So that's why for the gross margin, like in October and November, we can see that it's much higher, increased in terms of percentage points than the months before in the first half. So that means that overall speaking, it's likely that -- I'll talk about the retail sales only. It's likely that we maybe enjoy an even higher gross margin in the second half than the first half. So this is the first answer to your queries.

And then when we talk about October to November, actually, when we talk about the Mainland market, the performance was really good. And actually, from 1st of October to November, overall speaking, when we talk about a combined same-store sales figure for both operated and -- self-operated and licensed shop is actually exceeding 40%. And then for -- but for self-operated shops, it would be around mid-teens and for licensed shops more than 40%. So we mentioned quite a number of times in different investor meetings that the reason for lower performance for the self-operated shops was mainly because we are more conscious on the margin control. That's why we have less promotions done in our self-operated shops than the licensed shops. So -- and then actually, we've got -- when we talk about the product by product situation, actually, we can see that we have fix-priced jewelery products growing faster than the gold sales by weight type of product, mainly because we've got a very good -- we still have very good increase in the fixed-price gold products.

And then you're talking about November itself from 1st of November to 21, actually, there will be some seasonal effect inside too because October we've got like the National Day holidays. So basically, in November, with this new launch, actually, we can see that we have a bit lower performance than the October figures, but still exceeding 30% overall speaking for the Mainland market. And then when we look at the performance, actually, we have -- interestingly, actually, we have gold sales by weight increasing faster than the sales by the sales of fixed-price jewelry products in terms of same-store sales. So yes, that's the situation for the Mainland market.

Okay. Can I just follow up because I hope to seek your guidance on like same-store sales growth for the second half of this financial year? And also just to follow up on the sales performance for November, have we been seeing more purchases in Hong Kong, Macau, given the latest policy change for the VAT redemption in China?

Now interestingly, actually, at the beginning, we expect to see a better performance in Hong Kong because of that change in VAT policy. But in fact, it's not that case. Actually, we can see very good performance in Macau, but not in Hong Kong, very strange. So -- but still, we can see that Hong Kong, we have like -- when we look at the November figures in -- when we look at -- actually, mainly the Macau market that's having a very good performance and exceeding 30% same-store sales growth, but then -- I mean, in November. But then for Hong Kong, it's only a single digit. While in overseas, we have double digit as well. So Hong Kong, surprisingly is not as expected, performing better than the other markets. It's actually the other markets are performing better.

Right. I see. So overall speaking, are we changing our guidance on the same-store sales growth for second half?

Now actually, for same-store sales growth, we have a higher base in the second half. And originally, we expect the second half may be having a lower growth than the first half. I mean, in fact, when we looked at the October and November figures, I mean, up to now, you can see quite a strong growth actually in the latest month. So basically, I guess maybe we should expect -- because actually, overall speaking, we have a double-digit growth -- same-store sales growth in quarter 2 already. So we should -- I guess we should expect the double-digit growth in the -- to continue in the second half of the year.

Congratulations for very strong results.

Thank you.

Our next question is from Tiffany Feng from Citi.

I just have a follow-up question on the GP margin guidance. If the gold price maintain at the current level and you still have a lower cost inventory. But when the high-cost inventory coming in, what do you think of the GP margin for -- maybe for next year?

Well, if the gold price keep -- become very stable, no change. Of course, we would go back to standard margin. The standard margin should be something -- for gold should be something like 23%, something like that.

23%. That's overall for...

Standard margin. No, no, for gold only, gold selling by weight only. But then many experts are still expecting gold price to go up in the coming year.

Yes. Okay. Sorry. Please, go ahead.

No. I just want to remind you that we have a record high gross margin in this first half already. So maybe -- I guess maybe -- with the latest development, maybe we will still have a record high margin in gross margin in the second half.

Yes, yes, yes. I just want to double confirm the higher gross margin in second half is because of the price increase after the VAT policy change, right?

Yes, yes.

Okay. Okay. And do you have an updated guidance for the gold loan hedging loss for the second half?

No. Actually, in this first half, we don't really put too much focus on the hedging loss because actually -- because our revenue and profit are rising, so that means -- and the hedging loss is actually not that impacting our overall performance so severely as like last year. So basically, even though we talk about the -- if gold price keeps on rising, we would have expanded hedging loss, but then our sales would benefit from that with higher margin. And then we've only -- overall speaking, we've hedged only about 20%, 25%. So that means 75% without hedging. So for that 75%, we would enjoy, I mean, additional profits from the rising gold price.

Okay. So your assumption for the second half gold price is $4,100, 10% higher than the end of September. Is that correct for your GP margin guidance?

What do you mean? What's that 10% increase? What do you mean?

I mean do you have an assumption for the gold price in the second half to derive your GP margin guidance?

We don't normally forecast the gold price. The gold price fluctuation is very hard to predict.

Yes, yes. So basically, you assume the gold price maintain at the current level, right?

We -- when we talk about forecast or talk about budget, we always assume the gold price to be stable.

Okay. Okay. Understood. And second question is regarding the wholesale revenue, the very strong performance in the first half. Can you give us some more color to -- for the driver behind, and what is the outlook for second half and going forward?

Yes. In fact, when you look at the wholesaling business in the past, we've mostly diamond sales, 18-carat gold diamond sales. And within the COVID period start to drop -- the demand dropped quite severely and it's kind of a double-digit drop every year since COVID period. And then that's why in the past years, you can see -- few years' time, we can see that the wholesaling revenue in Mainland was -- continued to drop. So in this year, we have changed our policy or strategy in terms of wholesaling business. We try to shift those kind of exclusive type of products or promotional types of products into the wholesaling business so that the licensed shops are not buying these type of products directly from the suppliers, they are buying from us. So that's why you can see such a huge increase in the wholesaling revenue. So we will keep on doing that in the future.

Okay. Okay. Understood. And finally, I just want to follow up the November same-store sales growth. And why do you think the purchase -- the demand behavior is so resilient after the price increase? Is there any observation you have on the ground?

Well, in fact, I think this new change actually hit those very small retailers, especially those relying on price cutting. So basically -- I mean, price cutting on those gold selling by weight. And I think this change in policy actually drove all these types of retailers quite seriously. And then it seems that people are going back to us to buy those gold products by -- selling by weight. I guess it's because of that. So that's why we can see very strong performance of gold sales by weight after this change in policy, VAT policy.

Okay. You gained a lot of share from those smaller players?

Yes.

Okay. So do you think this is sustainable in the coming months? Or it's just a one-off shift?

Up to now, we can see we can still see very strong performance. So I think it's fine.

[Operator Instructions] At the moment we do have questions from the webcast. The next question is from Pu Hui from Huatai Securities. And the question is, could the management please provide an update on the performance guidance for the second half of FY 2026 and the full fiscal year? Additionally, how long do you anticipate the current trend of store closures in Mainland China will continue?

In fact, we have mentioned in the presentation that we expect for the full year, we would have a net reduction of around 200 shops altogether for the full year. So basically, it will be mainly licensed shops in Mainland. And you can see that we have a net reduction of 174 already in the first half. So that means that in the second half, it will be much less than the first half. So basically -- and then in our latest planning, actually, we expect to see or we target to see a much higher -- I mean, a net additional gain in the next financial year. That's what we are targeting at the moment. Of course, for this future year target, we will be updated in our final result announcement in June next year, 2026. So basically, at this moment, we are still optimistic about the future growth in terms of network expansion, I mean, in the next financial year. Yes. And then for the second half, you've talked for store...

Regarding guidance for the second half.

Yes. So in terms of shop closure, I think it will be much less than -- in the second half is much less than the first half, yes. Okay. Is that okay?

No we will get back to the audio questions. The next question is from Mavis Hui from DBS.

I just have a few more questions here. So it seems that the gold price ramped up even faster in October and November as compared to the half. So if that's the case and if there are market estimates that going forward into 2026 calendar year, the price could be stronger. Would there be any measures that we could adopt to mitigate our hedging loss, such as playing down a bit our gold hedging ratio? So that's my first question.

And then second one is then among our fixed-price gold product offerings, which product series were our top 1 to 2 performers? And by how much have they contributed to our interim results? And then my third question is that on our Slide 31, we mentioned a target to enter 3 more new markets during the latest 3-year plan. So do we have any idea right now that in terms of where these 3 regions will be? And by the way, with the plan for net addition of 50 stores in overseas markets for 3 years, which regions could be focusing more on our store expansion?

Okay. Actually, for gold price increase with -- actually, our hedging ratio is already the lowest amongst our peers. And we haven't changed that ratio for many, many years because we believe that gold price would go up in the long, long term. So long term is not only talking about a decade, it's decades. So basically, this is a policy, and we won't change our policy too frequently because it's something long term. So unless there will be some fundamental changes happening, but we don't see that to happen. So basically, we don't foresee any change in our hedging ratio at the moment.

And for the fixed-price jewelry products, I guess the best sellers would be those fixed-price gold products with diamonds. And then second one would be those without diamonds, especially the DiaBling collection. And then for the new markets, actually, we have some new markets in mind already, some in Europe and some in Southeast Asian areas. So basically, we have that in mind and in plan already. So I guess in next year, it would -- because we have entered one new market already, that's Vietnam. And then the next -- there will be at least 2 more countries entering in next year. So we will announce that once everything is confirmed.

And then for the net additions, I guess for some operating shops, we would add more like in U.S., Australia, Malaysia. actually we got some operating shops in 4 overseas countries only. That's U.S., Canada, Australia and Malaysia. So we would continue to add more self-operating shops in these 4 countries. But for -- maybe in some European countries as well. And then for the -- but for the net -- for the additions, mostly, they will be licensed shops. So licensed shops, we would mostly open in South Asian countries.

Right. I see. So how is the margin compared for overseas markets overall versus our group level? Is it possible to...

They have very -- they have similar margin level like Hong Kong, Macau market. And actually, they -- sometimes they perform even better than Hong Kong, Macau market in terms of profit margin. Especially they have -- actually, they have a high gross margin than all the other -- I mean, than those margins in Hong Kong, Macau and Mainland.

[Operator Instructions]

Thank you, Ray, and thank you, Kathy. That's all the questions we have today. And so we come to the end of our conference. Thank you once again for joining us. If you need an audio replay or any assistance, please contact us at [email protected]. Wishing you all a wonderful weekend ahead. Good-bye.

Goodbye.

This now concludes our presentation. Thank you all for attending. You may now disconnect.