- BUY Entry – 49.5 Target – 55.0 Stop Loss – 47.0
- Prada SpA is an Italy-based company engaged in the fashion industry. The Company is a parent of the Prada Group. The Company, along with its subsidiaries, is engaged in the design, production and distribution of leather goods, handbags, clothing, eyewear, fragrances, footwear and accessories. Prada SpA manufactures jackets, trousers, skirts, dresses, sweaters, blouses, as well as perfumes and watches, among others. The Company trades its products through several brands, such as Prada, Miu Miu, The Church and The Car Shoe. Prada SpA operates in approximately 70 countries through directly operated stores, franchise operated stores, a network of selected multi-brand stores and department stores. Prada Spa operates through numerous subsidiaries, including Artisans Shoes Srl, Angelo Marchesi Srl, Prada Far East BV, Tannerie Megisserie Hervy SAS and Prada SA, among others.
- 2021 business recovered and outperformed its pre-covid level. Total Group revenue for FY21 amounted to Euro 3,364 million, up 41% YoY and up 8% compared to FY19, both at constant exchange rates, boosted by the excellent performance of the Retail channel. Sales in Directly Operated Stores, including e-commerce in 2H21 grew 27% YoY and grew 21% compared to 2H19, both at constant exchange rates.
- Liquidity spill-over positively boosts consumption of luxury goods. The Covid-19 pandemic triggered flooded liquidity. Not only did prices of traditional asset classes such as equities and properties soar, but also prices of virtual assets such cryptocurrencies and non-fungible tokens skyrocketed. The demand for luxury goods saw a strong V-shape rebound. According to Bain & Co, the market grew by 29% at current exchange rates to hit EUR283bn, increasing the size of the market by 1% versus 2019 levels. It is expected to reach EUR360 to 380bn by 2025 with a sustained growth of 6-8% annually.
- Updated market consensus of the EPS growth in FY22/23 are 49.4%/28.5% YoY respectively, which translates to 40.0x/31.1x forward PE. Current PER is 65.9x. Bloomberg consensus average 12-month target price is HK$63.