PRADA SpA : Luxury glitters
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06/27/2012 | 11:31am
Opinion : Bullish above 47.5
Target price : 55
Stop loss: 47.1
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STOCK EXCHANGE OF HONG KONG
Apparel / Accessories |
The title of our last article on Italian luxury brand was “Luxury never dies”. Today we utilize the same words for another Italian brand, listed on Hong Kong Stock Exchange, Prada. In fact, the luxury sector is the only one that outperforms its benchmarks regularly, never mind if the company is listed in Europe, in Americas or in Asia.
Prada was founded in Milan in 1913 and has developed from a small family business to world’s leading luxury group. Among its brands we can find also Miu Miu, Church’s and Car Shoe. The company posted record results for the first quarter 2013 (Feb-Apr). Net revenue rose 48% YoY to €687 million, with profit growth of 111% to €122 million. At January 2012 Asia-Pacific is the main market in terms of revenue (36%) followed by Europe (35%), North America and Japan. The company shows highest EBITDA margin and profit margin in its sector after Hermes respectively 24.6% and 16.9%, and registered highest net income growth (72%).
The share was introduced on Hong Kong Stock Exchange in the end of June 2011. Prada such as its competitors glitters on financial markets. Since this date the share gained more than 20%, and since January the share has rose nearly 47%. In daily data the share is trading in bullish channel; in add the share is trading on 20 and 50 days moving averages. This level could play as stepping stone in order to reach new highs. We suggest a long position with a first target price at HKD 55. A stop loss will be placed HKD 47.1.
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Valuation |
2014e |
2015e |
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PER (Price / EPS)
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23,7x |
19,9x |
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Capitalization / Revenue
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4,77x |
4,14x |
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EV / Revenue
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4,63x |
3,92x |
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EV / EBITDA
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14,1x |
11,5x |
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Yield (DPS / Price)
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2,46% |
2,60% |
| Profitability |
2014e |
2015e |
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Operating Margin (EBIT / Sales)
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28,2% |
29,5% |
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operating laverage (Delta EBIT / Delta Sales)
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1,28x |
1,34x |
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Net Margin (Net Profit / Revenue)
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20,3% |
21,0% |
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ROA (Net Profit / Asset)
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21,7% |
22,5% |
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ROE (Net Profit / Equities)
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30,3% |
30,3% |
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Rate of Dividend
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58,3% |
51,7% |
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