PRADA: Beyond a tough comparison base in Q4, the MT outlook remains promising

BUY, Fair Value HKD82 vs. HKD72 (+13%)
News published on January Friday 18, 2013
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Following a contact with Prada this week, it confirmed the guidance delivered during the Q3 results conference call, sales in Q4 12 will decelerate in Retail (SSSG: +10% vs. +14% in Q3) due to a late Chinese New Year this year, and in Wholesale (-15%e vs. +11% in Q3) as the rationalisation strategy is continuing. Whilst we stick to our 2012 sales and EBIT estimates raised last December, we now increase our FV to HKD82 from HKD72 due to a roll-over to 2013 and updated assumptions in our DCF valuation. Prada remains one of our top picks within the luxury sector as the momentum on sales (2011-2014 CAGR of 20%) and on profitability (2011-2014 CAGR of 27%) is well above the sector averages.

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