The Swatch Group: A likely poor H1 but first signs of improvement in Mainland China
BUY, Fair Value CHF555 (+6%)
The Swiss watch group will release its H1 profits probably at the end of July or the first days of August. We expect a mid-single digit organic sales growth and a 200 basis point EBIT margin decline due to lack of operating leverage and heavy marketing investments. On the positive side, management perceives the first signs of normalisation in Mainland China since May/June. We maintain our Buy recommendation and our CHF555 FV.
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