Longfeng's low valuation combined with high dividend yield shows value.

Long Feng's Low Valuation Coupled with High Dividend Yield Highlights Its Value

Long Feng Group (2290) just listed on Friday, with its public offering oversubscribed by over 660 times. Based on Friday's closing price, its market capitalization is approximately HK$1.405 billion. The company estimates its net profit for the 2026 fiscal year to be around HK$265 million, which translates to a 2026 forecasted price-to-earnings (P/E) ratio of only 5.3 times. This is significantly lower than peers such as DFI Retail Group (22.2x), Sa Sa International (26.8x), and International Housewares Retail (12x), indicating its valuation is far below industry levels and presents substantial room for re-rating, offering good allocation value for investors.

Furthermore, after listing, Long Feng is expected to distribute an annual dividend of no less than 50% of its distributable profits. At the current price, the dividend yield is approximately 9.4%, far exceeding the typical industry range of 3% to 6% and the sector average of 4%. While current peer valuations are high with limited returns, Long Feng offers both low valuation and a high dividend yield, making its value proposition self-evident.

Solid Fundamentals and Omnichannel Strategy Drive Future Potential

The most important aspect of investment is assessing a company's prospects and fundamentals. Long Feng currently operates 31 stores, focusing on a "one-stop" shopping experience that attracts a large number of local consumers and tourists. The company plans to add 18 to 21 new stores over the next three fiscal years. Considering that its new stores typically reach breakeven within just 3 months and recoup their investment within 2 to 8 months, this demonstrates its operational efficiency and profitability possess a unique competitive advantage in the industry. Additionally, each Long Feng store carries over 9,000 SKUs, covering 11 core categories including beauty & skincare, health supplements, pharmaceuticals, and maternity & baby products. The company is not stopping there; it continues to expand its product portfolio and variety while deepening the development of its own brands. Own-brand products offer higher gross margins and differentiation advantages, helping to further enhance brand value and profitability.

Beyond offline expansion, Long Feng is simultaneously advancing its online channel development to achieve integrated online and offline growth. The company plans to strengthen sales through its current partnerships with major e-commerce platforms like Tmall and JD.com, while actively expanding into emerging social commerce channels like Douyin. Through content marketing, it aims to reach a broader consumer base in mainland China and continuously improve its online sales network. Although online business currently accounts for a relatively low proportion, these channels have significant growth potential as consumption patterns evolve. The company also plans to continuously optimize its membership system and enhance data analytics capabilities to improve conversion rates and user stickiness, while promoting inventory and sales synergy between online and offline channels to boost overall operational efficiency. As its omnichannel strategy deepens, Long Feng is poised to broaden its revenue sources while increasing operational flexibility and resource allocation efficiency, providing sustained support for future performance.

Vertical Supply Chain Extension and Continuous Improvement in Profit Quality

Long Feng has established a global sourcing system, maintaining partnerships with over 600 suppliers from Japan, South Korea, Europe, and the US, providing solid support for product diversity and cost competitiveness. The company further plans to extend into upstream suppliers and OEM manufacturing through strategic investments and M&A, comprehensively enhancing its control over the supply chain.

As intermediate links are reduced and economies of scale are realized, cost control capabilities continue to improve. Gross profit margin has increased from approximately 24.9% in FY2023 to about 31.6% in FY2025. With future gradual participation in upstream segments, the company will gain greater flexibility in product pricing, development, and supply scheduling, which will also support its own-brand development and further improve profit quality. For the market, this type of business model upgrade, extending from retail to the upstream supply chain, often provides an opportunity for valuation re-rating.

Long Feng combines low valuation with a high dividend yield. While its performance continues to grow, clear execution of development strategies such as supply chain extension, store expansion, and omnichannel development provides multi-layered support for the future. Its stable dividend policy builds a reliable foundation for cash returns. Compared to peers with P/E ratios often exceeding 20 times, Long Feng holds a clear advantage in both valuation and returns. As its valuation has yet to fully reflect its profit quality and growth potential, market recognition of its profit quality is expected to improve as performance is delivered, scale effects are realized, and business structure optimization becomes evident. For investors focused on both growth and income, Long Feng's value is gradually becoming apparent.