- RE-ITERATE Buy Entry – 43.5 Target – 49.0 Stop Loss – 41.0
- 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.
- Upbeat 1H22 results. Net revenue grew by 22.5%/22.2% at constant exchange rates of 1H21/1H19 to EUR1.9bn. Net sales of the retail channel grew by 26.4%/37.7% at constant exchange rates of 1H21/1H19. 1H22 GPM was at 77.7% compared to 74.3% in FY21 and 71.7% in FY19. Net profits jumped by 95.5% YoY to EUR189mn. 1H22 net sales in Europe and Americas jumped by 58.4% YoY and 55.6% YoY. Though Asia Pacifc remained the largest net sales contribution, the net sales of which dropped by 3.8% YoY during the period.
- Resilient luxury goods consumption amidst inflation and recession concerns. The inflation and recession fears haunted average consumers rather than the affluent class. The market leader LVHM also reported better than expected 2Q22 results. Besides a resilient demand from wealthy consumers, luxury brands companies have adjusted their selling prices against inflation. Meanwhile, according to a report by Bain & Company, China luxury goods market will see a rapid recovery in the second half of the year from the short-term impact caused by the epidemic.
- The updated market consensus of the EPS growth in FY22/23 is 47.3%/23.6% YoY, respectively, translating to 33.5×/27.1x forward PE. The current PER is 37.4x. Bloomberg consensus average 12-month target price is HK$53.47.