Prada: Reassuring start of the year despite current volatility
BUY, Fair Value HKD87 vs. HKD82 (+13%)
Last Friday Prada announced FY12 results (year ending 31st January 2013) consistent with market expectations. Sales growth was 23% at CER, marked by an expected deceleration in Q4 12 (+14% vs. +25% in Q3) due to a late Chinese New Year and less markdown sales. FY12 EBITDA margin widened 220bp to 31.9%, validating the strong operating leverage favoured by investors. Management reckons that the current environment is volatile but that February was“extremely good”, offsetting a softer March. We are increasing our 2013-15 EPS forecasts by 5.5% on average to factor in the ongoing operating leverage and some P&L items’ improvement potential (financial result, tax rate). Hence, we adopt a new FV of HKD87 vs. HKD82. Buy reiterated.
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