Luxury Stocks Suffer "Waterloo" Performance Decline

Listed on HKEx

In the interim results released by Prada, although the company's performance in China has increased by 50%, its net profit has increased by nearly 60% over the same period last year, but the company's share price performance is not strong enough.

Whether Hong Kong stock or A share market, in the recent Chinese luxury market growth expected slowdown, "luxury concept stocks" have encountered "Waterloo".

Decline in consumption growth

In September 26th, luxury brands listed on HKEx.

(01913) a decrease of 1.729% to HK $56.85.

After the announcement of the interim report, the stock fell continuously. In September 24th and 25th, Prada's shares fell 2.43% and 0.92% respectively.

In September 24th, Prada's interim performance report showed that in the half year of February 2012 to July, the company's pure profit increased by 59.5% to 286 million euros. The growth rate of China in the same period was over 50%, and the Chinese consumers with super purchasing power have become the main support for the growth of the company.

However, the chief executive of the company warned that the slowdown in sales was expected to continue to grow by more than 20% throughout the year.

In fact, China's consumption

It is not only the main force of Prada's growth, but also the absolute main force to support the growth of global luxury goods.

Statistics show that the consumption of luxury goods in mainland China increased by 20% to 96 billion yuan in 2011, which is higher than the global average growth rate of 10%.

However, Prada's stock price didn't go up as a result of the company's growth, but on the contrary, it fell for 3 consecutive trading days.

Analysts said the weak performance of Prada's stock price was mainly influenced by the news of the recent decline in China's luxury consumption growth.

In the case of luxury companies listed in Hong Kong, Milan's latest mid term performance report shows that the company achieved net profit of HK $386 thousand in the first half of this year, down 98.8% compared with the same period last year. The performance of the clocks and watches jewellery dropped 17% in the first half of the year, and the sales growth in the same store also slowed to 6%. The mainland's business profits dropped by 58.4%. The Hongkong jewelry retailer Zhou Shengsheng's China Daily reported that the company achieved net profit of 439 million yuan by the end of June this year, down 11% compared to the same period last year, and the sales of the middle and high-end watch distributors in the first half of this year increased by only 6%, compared with 38% in the first half of last year.

In addition, although Zhou Dafu has not released interim results, but from the second quarter of this year's data, the company's first half performance decline probability seems to be very large.

Zhou Dafu's income grew by only 16% in the second quarter of this year. Zhou Dafu's annual income increased by 61% in the fiscal year.

Poor market performance

The performance of luxury enterprises listed in Hong Kong is only a microcosm of the industry. The performance of more luxury goods is not satisfactory, mainly due to the decline in China's regional performance.

Burberry, the famous luxury brand, slumped its performance in the Asia Pacific market in the second quarter of this year. Sales in the second quarter increased 18% compared to the same period last year, while the growth rate reached 34% in the previous half year. After the announcement, Burberry shares fell 7% in the London market.

In addition, in the first half of this year, although the overall sales performance of the luxury goods giant Louis Weedon (LVMH) Group continued to grow, the sales performance in the Chinese region had a slight decline.

"Like the slowdown in consumption of high-end liquor, the growth of China's high-end consumption has begun to slow down under the two roles of market and policy."

A private fund official in Shenzhen told the international finance daily, "on the one hand, the consumption habits of high-income people have undergone subtle changes due to the macroeconomic downturn. On the other hand, the introduction of the" three public consumption "policy and the prohibition of high-end consumption have had a negative impact on the sale of luxury goods.

Data show that this year, about 30% of China's rich said it would reduce spending on luxury goods, and the average annual salary of 160 thousand -18 yuan in the middle class is even more obvious.

There are also some stocks in the A share market that are related to luxury goods, but neither performance nor share price performance is satisfactory.

For example, seven wolves, Luo Lai home textiles and so on.

After buying Kenna Hangzhou in 2011, the seven wolves got on the edge with luxury goods.

However, this part of the business has not contributed much to the company's performance at present, and it has made no contribution to the company's share price.

In the past 1 months, the share price of the seven wolves has dropped by 17%.

In the first half of this year, the net profit attributable to shareholders of listed companies fell by 17.70% compared with the same period in the first half of this year, and its share price performance was also poor.

Looking for new growth points

The first luxury fund in China, the rich world's top consumer goods equity investment fund, is more able to explain investors' views on the industry.

In the second quarter of this year, the net value of the fund fell by 11.76%.

For the reasons for the second quarter net value decline, the Fund pointed out that in the second quarter, investors realized that increasing liquidity was not enough to solve the European debt problem, especially in May, when Greece's general election failed to form a cabinet, which further aggravated the panic in the market and the stock market gradually rose.

The decline in stocks of top consumer goods is basically the same as in the market.

The net value of the fund has rebounded since August, but the decline began again in mid September.

Despite the weakness of luxury consumption in China, the industry is still optimistic about the growth of luxury consumption in China.

Geng Banghao, an analyst at Ping An Securities Industry, predicted that the demand for luxury goods in China will grow by 18% in 2015, which is higher than the global growth rate.

With such optimistic expectations, there are many luxury goods manufacturers.

Therefore, these manufacturers began to tap the potential of the Chinese market in depth.

Some luxury brands have turned to China's two or three tier cities and continue to seek growth.

Take Samsonite, the world's largest tourist suitcase company, for example, the company expects to add 500-600 new stores in Asia this year.

Among them, 200 new shops are planned in China, 100 in the first half, and 150 in three or four line cities, and 50 in a second tier city.