Who Will Become The Next Big Card To Be Bought?

The industry is facing a cold winter, and the luxury market is likely to start a wave of mergers and acquisitions.

According to reports, Mario Ortelli, a luxury industry analyst at Sanford C. Bernstein, a brokerage firm, believes that the independent luxury brands controlled by Italy fashion dealers Armani, French women's brand Chanel and Swiss watch Audemars Pigeut are likely to become the target buyers.

According to the report of Bain, a consultancy, because the Chinese government implemented and promoted anti-corruption and domestic economic growth, the luxury market in mainland China decreased by 1% in 2014 compared with that in 2013, and the market size dropped to about 115 billion yuan, the first negative growth in the market.

It is considered that in the downturn of the market, family controlled luxury brands such as Armani and Audemars Pigeut are more vulnerable than those of the big luxury group.

Ortelli points out that the problem with these family luxuries is that it is hard for them to "expand the brand" because they must "keep up the grid" and the weakness of the Chinese market makes them more challenged.

Louis Weedon, Li Feng, Kai Yun, Swatch and other large groups can share risks in multiple brands and withstand short-term market shocks.

Swiss traders are having a harder time, and the Swiss Franc has appreciated nearly 20% against the euro since the Swiss central bank announced the exchange rate decoupling.

In order to cope with the squeeze on profits from rising costs, Swatch and Li Feng have announced price increases for foreign currency denominated products, and other companies may follow up.

But this creates one.

If consumers do not pay the bill, the backlog of stocks will bring family brands into trouble and provide opportunities for large groups with large cash holdings.

According to Otrelli, the cash balance of nine luxury goods giants in the world in 2014 exceeded 16 billion US dollars, two times more than in 2007.

He expects to increase to $32 billion in 2017.

From the past two years of experience, the money will "make the best use of it".

In 2013, Louis Weedon spent $2 billion 600 million to buy cashmere retailer Nuo Pian ya, Swatch spent $1 billion to buy it.

Harry Winston; last year, Kai Yun group bought a watch business Ulysse Nardin for 860 million US dollars.

Not only that, private equity funds and other institutional investors are also eyeing the high profit luxury goods industry.

Blackstone, for example, acquired 20% of Versace's shares in February last year, and the fashion brand Tory Burch 2013 also sold equity to BDT capital and General Atlantic, valuing $2 billion.

Otrelli lists a brand list that might be acquired, with more than 50 luxury items on it.

In addition to Armani and Audemars Pigeut, there are also famous brands such as Chanel, Versace, Zegna, long, Rolex, Rolex and so on.

Do you want some investment advice? Ortelli recommends buying shares of Louis Weedon and ex peak group, and mergers and acquisitions, dividends and stock repurchases will push the luxury giant's stock up 30%.