Luk Fook Holdings (International) Limited (0590.HK) Earnings Call Transcript & Summary

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 Lookffolg 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 CFO. Kathy will take you through the interim results. After that, we will move straight into the Q&A session. The call will be accounted 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. Kathy, please.

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 has been uploaded to our website. Let's look at Slide 4 about the financial highlights first. Despite substantial political tensions and trade uncertainties and clouding the macroeconomic outlook and driving gold prices continue to move upward, the group's performance across all regions remain outstanding. Underpinned by effective product differentiation and sales strategies with the search and sales of fixed-price jewelry products, the goods revenue increased by 25.6% to HKD 6.8 billion compared to the same period last year. In addition, the favorable operating leverage effects lifted the operating profit margin by 1.6 percentage points to 11.4% thereby boosting the operating profit by 45.4% to HKD 118 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 3G jewelry shock. Next slide shows the movement in operating profits. Benefits from the rising 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 margins were a record high for both interim and annual results. As a result, the group's gross profit increased by 33.2% or HKD 2.37 billion. The operating expenses increased by 12.4% to around 1.3 billion. fast to revenue growing at a faster pace. The group benefited from operating vestige with the TOE ratio improving by 2.2 percentage points to 19.1%. Research and 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 718 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 turns base increased by over 60 days year-on-year, reaching a total of over 490 days by end of September 2025. However, is comparing to first half of first 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 occur 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. Excellent profit increased by 37.3% to HKD 587 million, accounting for excess 8.2% of the group's total, while set from margin was 13.2%. The wholesale 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. If segment profit increased by 18.2% to HKD 274 million, accounting for 31.8% of group's total and asset profit margin was 9.2%. Slide 13 shows our revenue and segment profit by business. Retail versus source the main source of revenue of the grid. -- diversity retailing revenue increased by 12.8% to HKD 5.26 billion accounting for 76.8% of group's total revenue in segment profit increased by 24.6% to 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 and the wholesale business, coupled to successful product differentiated strategy, with new products achieved incredible sales performance. Therefore, the group's wholesaling revenue significantly rose by 19.6% to HKD 1.12 billion, accounting for 16.3% of the group's total revenue. is segment profit turnaround from a loss to a profit of HKD 108 million, accounting for 12.5% of total and capture profit margin was 9.7%. As was the second margin even profit of wholesale business included process from intercell sales to self-operated shops, if including inter-satellite denominator in cement from 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 books total revenue. segment profit margin was 38.6%, while installment 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 pre under-reviewed average interaction goes in U.S. dollars 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. This gross margin increased by 2.8 percentage points to 3.3% because of rising gold prices. Gross profit from gold and platinum products, therefore, increased by 22.3% to HKD 1.24 billion, accounting for 59% of the overall gross profit. On the other hand, the sales of fixed fine 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 silver jewellery products, which has lower gross margin than returning gross margin for fixed line jewelry products before decreased by 7.5% points to 36.8%. This gross profit, however, increased by K38 million, accounting for 4.3% of overall gross profit. Now let's look at Slide 16 for performance in Hong Kong current overseas market. Recurring revenue from the Hong Kong Maccura overseas market increased by 8.9% to 3.7 billion, accounting for 97 total and 54.7% of group total revenue. profit increased by 17.4% to HKD 491 million, accounting for Tier 3.6% fees market total and 47% of goods total, with segment profit margin of 13.1%. Moreover, due to the addition of 5 business licensed shops during the period under review, wholesale revenue increased by 89% to HKD 1 million accounting for 2.1% of the hole from Macau offices market total revenue and 1.2% of the gross total see profit was HKD 62 million, accounting for 10.6% of this market's total and 7.2% of the group's total. Its settling profit margin was 76.2%, as the saline profits of conserving business included the profit of interesting so sell offer shops, if including the scale denominator cement profit margin will be 5%. On the other hand, Hong Kong licensing income increased by 3.8% 33 million, accounting for 0.9% of this market's total and 0.5% of the group's total. Segment profit increased by 5.9% to $34 million, accounting for 5.8% this market to low and 4% of the group total. The segment profit margin was 13.2%. 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 million fans of Mainland markets total and 22.1% of Brooks total. However, due to segment losses in PDG's Mainland retailing business, as a result of gold hedging losses, the gross retailing business in Mainland recorded HKD 14 million, accounting for negative 5.2% of mainland markets total and negative 1.6% of the group's total. Segment profit margin was negative 0.9%. Actually, the gold hedging lost half of the -- more than half of the gold hedging losses actually incurred in September 2025. So with the impact of gold hedging losses is excluded the Mainland retailing business, which has recorded a segment profit of HKD 182 million. In fact, more than -- yes, 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 voted because we have to -- we can only book the profits or the appreciation that in 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 and the wholesale business, coupled with the robust sales performance of these new products, the group's revenue of the wholesale business grew significantly by 203.4% to around HKD 1.04 billion, accounting for 34.7% of the Mainland markets revenue and 15.1% of group's total. Segment profit was 6 million, accounting for 16.8% of Mainland markets total and 5.3% of group's total. Segment profit margin was 4.4%. As the semi profit of wholesale business included profit of Intersect self-to-self operating shops, if including intersecting the denominator that is segment profit margin will be 3.8%, Licensing income in the Mainland market increased by 17.7% on 438 million, which counted for 14.7% of Mainland markets revenue and 6.4% of the group's total. The segment profit increased by 16.9% to HKD 242 million, accounting for 88.4% of Mainland markets total and 28.1% of group solar and the segment profit margin was 55.3%. Turning to Slide 19, which shows the breakdown of returning revenue by region. The group continues to actively expand into overseas markets and enter into the Vietnam market for the first time during the preundereview. Revenue from the overseas market grows by 58.4% to HKD 482 million, accounting for 9% of the group's return on revenue percentage points higher mix than Santen 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 and revenue in Mainland and 15% of the gross return on revenue with ASP increased by 33.3% of RMB 2,800. Now let's turn to Slide 26. So even though TOE rose by 12.4% from HKD 1.3 billion, revenue growth outpaced this increase. As a result, TOE revenue ratio improved by 2.2 percentage bond 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 spent 27 renewals out of 69 shops in the first half of financial year '26, with overall rental decrease of more than 25% in renewal. Let's turn to Slide 28 for capital expenditure. We do not have any significant capital expenditure in first half of FY 2026 and then now let's look at the group's future plans and strategies. The group has set of this new 3-year corporate strategy starting from FY '26 with overseas market expansion, market-oriented products and operation efficiency enhancement as three main focuses is to foster its future business growth. On Slide 31, you can see that we have significant growth -- actually, we have -- we can see a significant growth potential overseas markets. We will therefore continue to allocate more resources to actively expand our global footprint and keep open the new shops overseas. The group entered the Vietnamese market for the first time in the first half of mantis financial year. And currently, our group's footprint spends 12 countries and regions with the gold and 3 additional countries and net at 5 new offices shop 3 years from the last -- from this financial year to the financial year ending March 2028. And in fact, although we talk about net additional 50 overseas shops in 3 years' time, but actually, I highly likely that in the next financial year, we have exit this 50 overseas shop additions already that lease by 2 years' time, we should be able to achieve that target -- 3-year CapEx. So in Slide 32, we -- you can see our network expansion in CapEx to FY 2026 we plan to have a net addition of around 20 shops in overseas market 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 although we have that in the beginning -- 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 office and plant valuation as well as purchase new equipment for office. Let's look at Slide 37, which covers our second strategy, focusing on market or products. So in response to the trend of polar rise consumption, we are expanding our focus to grow premium affordable luxury segments. We continue to optimize our product mix launch concept stores and enhance product in-store merchandising. We'll keep on sharpening our product differentiation for telistronger brand stories and values planning unique design is cutting edge craftsmanship, offering personalized customization, launching IT collaboration projects and our holding top quality standards with efficient product management, we tightly aligned sales and marketing, but we pushed sellers and wrap every sales opportunity to maximize volume. At the same time, we'll stay a agile on inventory, fine tune the product mix and [indiscernible] adjust to whatever the market demands. Last but not least, Slide 8 shows our third strategy, operational efficiency enhancements. We will boost productivity by streamlining supply chain management rolling out full automation, big data analytics and AI applications and strengthening post-deferment collaboration with agile project management, will also maximize employee productivity by building culture continuous implements 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 topic customers and aim to foster high customer loyalty. This slide is showing that we are not increasingly diverse customers. We continue to get our multifront strategy by building a clearly differentiated brand portfolio that precisely target different segments will fully leverage its brand's unique trains to drive synergies and stronger growth. On Slide 41, we have invited frames after Thane as the global brand ambassador to reduce at the brand inaction capito his masses worldwide can banks. On Slide 42, you see we have our signature collection dialing for the Marine Gold feature CMC color radiating finished, 360 agrees in silica and precision laser cutting to deliver stunning multi-stack 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 rule, which symbolizes fortune and prosperity. With long to 3 of promotional accounting mitogen Gator as old truly resonate with consumers and take book in their hearts. On Slide 44, Taiwan Fortune collection, another signature line using explosive epitopes and mother offer inlay and build coloring brings traditional culture [indiscernible] timeless arise thesis. We horoshowsof term of Sundyne, Beijing and Diane in May 2025. On the next slide, Loibl, a natural diamond collection that has been launched for over 14 years. It has seen deeply ingrained in consumers' hubs. On Slide 46, we further strengthened our leadership in the Chinese category through 3 IT collaborations with 10 tales culture creation 1 of tenet bandwidth in 10 places, a top 10 national IP of 21 was launched in September 25 with over 140 new products. The other 2 collection will roll out into 2. Let's try following the hugely successful total collaboration of the phenomenon FIM, no. We launched a new series tied to the global it later too. On the other hand, we collaborated with and for over 10 years to create numerous jewelry products of the rule come. On Slide 48 for the 24th year, Luk Fook jewelry served is official sponsor of the cloud and jewelry for the Hong Kong pain look also introduce a lot yourself conduction and limited additional K-Gold Diamond Proud to strengthen its brand image connect building. We also to launch new products with execute at founded by Renal Chinese [indiscernible]. On the next slide, to celebrate Anversa, we launched a brand-new fund net production gold jewelry and Kickstarting some promotions. C5 shows some VIP figures -- our membership base increased 20% to reach over JPY 9 billion in first half of financial year 2016, with members contributing 78% of the total retail sales, members spending in the first half surge. Slide 50 highlights the results of our VIP and 4 months. We rolled out the series of online and off-line incentive that successfully attracted new customers, boosted engagement and drove strong in-store sales. number contribution to group's retail sales in BIG and fan 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, in fact, we invited celebrities to long-term marketing campaigns, the race brand awareness and recognition among our customers of different brands and product collections. Slide 53, for organized promotional activities for various reputable partners, including Tango Blue Girl, China EverbridBank and Starbucks to expand our brand exposure to target customers. Effective sustainability governance is a crucial factor in driving long-term success of the grid. 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 the 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 onward indicating that consumers has gradually adapted to higher gold prices. From first of October to the first 3 weeks of November 2025, the group continued to report satisfactory sales growth across all markets. Simple [indiscernible] in both the Hong Kong, Macau and Noises market and the Mainland market reported double-digit growth. The Mainland market exhibited significant improvements compared to the second quarter of the current financial year, while performance in Hong Kong-Macau 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 for [indiscernible] cost has increased, which in turn drove up the cost of gold products. Fortunately, the offset factors do not materially dampened consumer demand for gold from in Mainland. During the period from 1 to 21 November 2025 same-store sales growth in the mainland market, covering both self-operated shops and [indiscernible] shops as well as in the Hong Kong Makan overseas market and continue to achieve double-digit growth. This concludes my presentation. Thank you.

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

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

I just have 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 21. So is it possible to compare that 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 products for November so far? Talking about fixed price gold products, weighted gold products and gem-set overall? And my third question is that given the strong set of interim results, so we check on our latest same-store sales growth and margin guidance for the full year of FY '26.

I mean, I'll answer the margin queries first. Actually, especially in the Mainland China because of that new VAT policies, actually, we have to increase our selling price quite soon after the new policy became effective. That's why actually, for those products actually is before that policy was released. So that means that the cost will be a bit lower because no additional VAT amount inside. Therefore, in the first few months against 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 increase in terms of percentage points than 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 performance was really good. And Actually, from 1st of October to November, we overall speaking, when we talk about the combined same-store sales figure for both operated and asset operated and license is actually exceeding 14%. And then -- but for self-operated shops, it would be around mid-teens for licensed shops more than 40%. So we -- I've mentioned quite a number of times in different investment for lower performance for the self-operating shops was mainly because we are more conscious on the -- or more cautious on the margin control. That's why we have less promotions done in our self-operational and 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 our fixed-price jewelry products growing faster than selling gold selling-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 -- and then you're talking about November itself from -- from first of November to 21. Actually, there will be some seasonal effect in insight because October is -- we've got like their National Day holidays. So basically, in November, with this new launch, actually, we can see that we have a bit lower performance than their October figures, but still exceeding 30% overall speaking for the Mainland market. And then when we look at the look at the performance, actually, we have the -- interestingly, actually, we have gold sales by weights are increasing faster and 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. Yes.

Can I just follow up? Because I hope to seek your guidance on like our 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, but very strange. So -- but still, we can see that Hong Kong, we have -- like when we look at the November figures when we look at the actually, mainly the Macau market that's having a very good performance and is exceeding 30% same-on-same growth, but then -- I mean, in November. But then for Hong Kong is only a single digit. -- while in overseas, we have a double digit as well. So Hong Kong surprisingly is not as expected, performing better than the other market. 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 maybe having a lower growth than the first half. And 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 we're actually over 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.

Right. Congratulations for very strong results.

Our next question is from Tiffany Feng from Citi.

Just have a follow-up question on the GP margin guidance. If the gold price maintained 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 become very stable, no change. Of course, we would go back to the standard margin should be something for gold would be something like 23%, something like that.

23% overall and margin. No, no. For gold only. for gold only gold selling by weight on...

But then many experts are still expecting gold price to go up in the coming year.

Yes, yes. Okay.

Okay. So the sorry, sorry. 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 we'll with the latest development may we will still have a call high margin in gross margin in the second half.

Yes. Just wanted to double confirm the higher gross margin in the 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 fairly like last year. So basically, even though we talk about the -- if gold price gold price keeps on rising, we would have expanded hedging loss, but then ourselves would benefit from that with higher margin. And then we've only -- overall speaking with hedge only about 20%, 25%. So that about 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 HKD 4,100 or 10% higher than the end of September. Is that correct for your GP margin guidance?

Was that 10% increase or demand 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. Gold price fluctuation, it's very hard to predict.

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

We all -- let me talk about forecast or -- and when you 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 mostly diamond sales, 18 karat gold diamond sales. And within the corporate carrier start to drop, the demand drop places safely and is kind of a double-digit drop every year since COVID period. And then that's why in the past years, you can see a 3 years' time, we can see that the whole earning revenue mainly continue to drop. So in this year, we have changed our policy or strategy in terms of wholesale business. We try to shift those kind of exclusive type of products or promotional type of products into the wholesaling business so that the licensed shops are not buying these type of 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 on November same-store sales growth? And why do you think purchase the demand behavior 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 price-cutting. So basically, I mean, price cutting on those gold selling by weight. And I think this change in policy actually drove out 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 the facts. So that's why we can see a very strong performance of gold sales by after this change in policy, VAT policy.

Okay. you gain a lot of share from those smaller payers?

Yes.

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

Optimal, can 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 [indiscernible] 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 774 already in the first half. So that means that in the second half, it will be much less than 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, this -- for this future year target, we will be updated in our final result announcement in June next year, 26%. 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 -- yes, you've talked about stock sorry.

The guidance Guidance for the second half.

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

Thank you, Kathy. Now we will get back to the audio questions. And the next question is from Mavis Hui from DBS.

Kathy, I just have a few more questions here. So it seems that the gold price ramp up even faster in October, November as compared to the first half. So in that case, and if the market estimate that going forward in 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 1 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 on our Slide 31. We mentioned the 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 a plan for a net addition of 50 to 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 among 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, long term is not only talking about decades with -- after decade. So basically, this is a policy and we won't change our policy too frequently because it's something long term 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 gold products, I guess the best sales would be there are those that our fixed-price gold products with diamonds. And then second 1 would be those without the hypers, especially the Dibang collection. And then for the new market section, we have some new markets in mind already on -- some in Europe and some in Southeast Asian areas. So basically, we have that in mind and in plan already. So -- but I guess next year as would -- because we have a new 1 new -- we have and 1 new market already, this 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. That's more for maybe in some European countries as well. And then for the additions mostly, they will be licensed shops. So we 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...

So they have very -- they have similar margin level like Hong Kong Macau market. But -- 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. 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 a wonderful weekend ahead. Goodbye.

Goodbye.

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