Key takeaway

In 2025, the company recorded revenue of RMB8.815bn /-36.5% and net profit attributable to shareholders of the parent company of RMB1.103bn /+9.2%. In 1Q26, the company recorded revenue of RMB1.954bn /-26.9%, and net profit attributable to shareholders of the parent company of RMB293mn /+16.4%。 By business segment, in 1Q26brand usage fee revenue was RMB209mn /-3.1%,plain gold revenue RMB1.416bn /-33.0%, the sharp decline was mainly due to cautious inventory replenishment by franchise channels; inlaid jewelry revenue was RMB120mn /-6.6%,sales initially stabilized driven by gold diamond- inlaid products。 By channel, in 1Q26franchise channels, self-operated offline, e-commerce revenue were-57.6%, +39.0%, and +32.0%, respectively. In 1Q26, the companyreported a gross margin of 39.43% /+13.22pct and a net margin of 15.02%/+5.60pct. Changes in product and channel mix, together with gains from the appreciation and monetization of gold inventory, jointly drove profitability improvement. The company expects total cash dividends of RMB977mn for the full year of 2025. As of the close on May 11, the company’s dividend yield (TTM) was 6.80%. Looking ahead, the company is actively adjusting its product mix, strengthening store openings in self-operated channels, and building a differentiated brand portfolio to respond to industry trends. Starting April 14, the company raised the brand usage fee for gold products priced by weight. Full-year performance is expected to achieve steady growth.

Event

The company released its 1Q26 earnings results. In 1Q26, the company recorded revenue of RMB1.954bn /-26.9%, net profit attributable to shareholders of the parent company of RMB293mn /+16.4%, and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB281mn /+16.1%.

The company released 2025 earnings results. In 2025, the company recorded revenue of RMB8.815bn /- 36.5%, net profit attributable to shareholders of the parent company of RMB1.103bn /+9.2%, and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB1.062bn /+7.5%. Net cash flow from operating activities was RMB464mn /-75.0%. Basic EPS was RMB1.02 /+9.7%, and ROE (weighted) was 17.16% /+1.44pct. The company plans to distribute a final dividend of RMB6.5 (tax included) per 10 shares. Together with the interim dividend, total cash dividends for the year are expected to reach RMB977mn, with a payout ratio of 88.55%. As of the close on May 11, the company’s dividend yield (TTM) was 6.80%.

On a single-quarter basis, in 4Q25 the company recorded revenue of RMB2.043bn /-33.7%, net profit attributable to shareholders of the parent company of RMB222mn /+42.7%, and net profit attributable to shareholders of the parent company excluding non-recurring items of RMB209mn /+39.1%.

Quick Take

By product category: In 1Q26, brand usage fee revenue remained relatively stable, plain gold sales declined sharply, and sales of inlaid products initially stabilized driven by gold diamond- inlaid products.

1) Brand usage fee: Franchise wholesale is the company’s main profit source. Franchisees procure goods from designated suppliers, and their profit contribution to the company is reflected in the form of brand usage fees. In 2025, the company’s brand usage fee revenue reached RMB767mn /+11.5%, accounting for 8.7% of revenue. In 1Q26, the company’s brand usage fee revenue was RMB209mn /-3.1%, accounting for 10.7% of revenue.

Revenue from brand usage fees was jointly affected by two factors: On one hand, after the rapid rise in gold prices, prices fluctuated at high levels, the number of franchise stores declined, and overall purchasing became cautious; on the other hand, the company proactively adjusted its supply structure, and the sales share of fixed - price products with higher brand usage fees increased. According to the company announcement, starting from April 14, 2026, the brand usage fee for per- gram labor- fee–priced gold products in the franchise channel of the main brand and classic stores will be raised from RMB12/gram to RMB24/gram, while the brand usage fee standard for piece- priced gold products will remain unchanged. Looking ahead to 2026, revenue and profit contribution from brand usage fees are expected to rise steadily.

2) plain gold products: In 2025, revenue from plain gold products was RMB6.342bn/-44.6% YoY, accounting for 71.9% of total revenue, with YoY changes of -68.1%, +2.9%, and +5.9% in the franchise channel, self-operated offline channel, and self-operated e-commerce channel, respectively; in 1Q26, revenue from plain gold products was RMB1.416bn/-33.0% YoY, accounting for 72.5% of total revenue, with YoY changes of -82.7%, +36.9%, and +54.4% in the franchise channel, self-operated offline channel, and self-operated e-commerce channel, respectively. Affected by persistently high gold prices and weak consumption, terminal sales volume declined, downstream franchise clients destocked and showed weak replenishment willingness, while the company’s self-operated offline and e-commerce sales delivered strong growth.

3) Studded products: In 2025, revenue from studded products was RMB0.761bn/+0.4% YoY (of which goldstudded product revenue was RMB0.686bn/+19.8% YoY), accounting for 8.6% of total revenue, with YoY changes of -13.1%, +83.5%, and +1.4% in the franchise channel, self-operated offline channel, and self-operated ecommerce channel, respectively; in 1Q26, revenue from studded products was RMB0.120bn/-6.6% YoY, accounting for 6.1% of total revenue, with YoY changes of -58.7%, +72.5%, and +4.0% in the franchise channel, self-operated offline channel, and self-operated e-commerce channel, respectively. Consumption of diamond-studded products remains at the bottom, but driven by sales of gold diamond-studded products and the self-operated offline channel, preliminary signs of stabilization have emerged.

By channel: In 1Q26, revenue from the franchise channel declined while gross margin increased significantly, and revenue from self-operated offline and e-commerce channels grew rapidly.

1) Offline: As of the end of 2025, the company had a total of 4,479 retail stores, including 4,081 franchise stores and 398 directly operated stores, with net store closures of 529 in 2025; as of 1Q26, the company had a total of 4,193 retail stores, including 3,803 franchise stores and 390 directly operated stores, with net store closures of 286 in 1Q26. By quarter, net store closures were 177/113/43/196/286 in 1Q25/2Q25/3Q25/4Q25/1Q26, respectively. This was mainly due to franchisees closing stores. The company will place greater emphasis on improving single-store quality going forward. Offline by channel: ① Franchise channel: In 2025, revenue was RMB3.894bn/-57.6%, and gross margin was 32.4%/+16.3pcts. In 1Q26, revenue was RMB0.482bn/-69.6%, and gross margin was 54.1%. ② Offline direct-operated: In 2025, revenue was RMB1.887bn/+8.2%, and gross margin was 37.0%/+5.7pcts. In 1Q26, revenue was RMB0.733bn/+39.0%, and gross margin was 39.3%. The company proposed the “ten-hundred-thousand” strategy to strengthen direct retail. Over the next five years, the target is 1,000 directly operated stores, RMB10bn in direct retail sales, and RMB1bn in direct net profit.

2) E-commerce: In 2025, revenue was RMB2.857bn/+2.2%, and gross margin was 22.7%/-1.4pcts. In 1Q26, revenue was RMB0.705bn/+32.0%, and gross margin was 27.9%. The company continues to deepen its presence on major platforms such as Tmall, JD.com, and Douyin. It is also actively expanding into emerging channels such as Dewu and Xiaohongshu. Through a multi-category and differentiated product strategy, it has achieved steady growth in online business.

Changes in product and channel structure, together with appreciation of gold inventory, jointly drove the improvement in gross margin. In 2025, the company’s gross margin was 31.35%/+10.55pcts, and net margin was 12.50%/+5.29pcts. In 1Q26, the company’s gross margin was 39.43%/+13.22pcts, and net margin was 15.02%/+5.60pcts. A higher proportion of revenue from direct-operated channels, a higher share of franchise brand usage fees, and a rising share of high-gross- margin fixed-price gold and non- gold categories (inlaid jewelry, K- gold, etc.), together with monetization of appreciated gold inventory through product sales, jointly drove the overall increase in the company’s gross margin. On the expense side, in 2025 the company’s selling expense ratio, administrative expense ratio, R&D expense ratio, and financial expense ratio were 12.20%/+3.80pcts, 1.36%/+0.56pcts, 0.15%/+0.04pcts, and 0.15%/-0.00pcts, respectively. In 1Q26, the selling expense ratio, administrative expense ratio, R&D expense ratio, and financial expense ratio were 12.11%/+2.66pcts, 1.54%/+0.51pcts, 0.18%/+0.08pcts, and 0.45%/+0.40pcts, respectively.

Looking ahead, the company is actively adjusting its product structure, strengthening the expansion of direct-operated stores, and building a differentiated brand matrix to respond to industry trend changes. On the channel side, the company adheres to the strategy of “expanding strong channels and eliminating weak ones.” It strategically emphasizes offline direct-operated stores and continues to optimize its store network in core business districts of tier-one and tier-two cities. On the brand side, it has built a four-brand matrix: CHOW TAI SENG (core brand), CHOW TAI SENG Classic, CHOW TAI SENG × National Treasures, and Zhuanzhuge. CHOW TAI SENG × National Treasures will undergo comprehensive upgrades in both channels and products. Leading stores are striving to achieve single-store sales exceeding RMB100mn. The investment model of Zhuanzhuge is still in the exploration stage. On the product side, the company actively adjusted its product mix. It took the lead in upgrading the product structure of directly operated stores and drove franchised stores to follow, increasing the share of fixed-price gold products and raising the proportion of non- gold products.

Investment recommendation: We expect the company’s revenue in 2026–2028 to reach RMB9.178bn, RMB10.040bn, and RMB10.928bn, up 4.1%, 9.4%, and 8.8% YoY. Net profit attributable to shareholders of the parent company is expected to reach RMB1.266bn, RMB1.408bn, and RMB1.546bn, up 14.7%, 11.3%, and 9.8% YoY. Corresponding PE is 11.3x, 10.2x, and 9.3x. We maintain a “buy” rating.

Risks: 1) Risk of weaker-than-expected consumption demand:The company’s products are mainly gold and gemstone- inlaid jewelry, with a relatively high average ticket price. If residents’ income levels remain low or the macroeconomy stays weak, demand may decline. In addition, a rapid short- term rise in gold prices may suppress end- consumer demand and reduce distributors’ willingness to stock inventory, affecting the company’s sales. 2) Franchise management risk:The company implements standardized management of franchisees in areas such as product pricing, store location and image, product quality supervision, marketing, and after-sales service. It has also established a supervision system to ensure franchise operations comply with company requirements. If franchisees’ business activities deviate from the company’s brand management principles and the company fails to exercise timely control, it may adversely affect the company’s brand image and future development. 3) Product quality control risk:A relatively high proportion of the company’s gold products are supplied through designated suppliers. If the company fails to effectively implement product quality control measures and quality issues or disputes arise, this may negatively affect the company’s brand and operations. 4) Risk of tax policy changes for gold, diamonds, and other products: Jewelry such as gold and diamonds is subject to consumption tax and value- added tax. If national tax policies change, this may affect corporate operating costs and have a certain impact on business operations and performance.