Prada Group Continues To Experience Investment Banking

The worst performance of luxury goods industry in the past three years

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SpA (1913.HK) Prada Group continued to encounter investment bank bearish report.

After being sung by UBS AG (UBSN.VX) UBS in the middle of the month, Bank of America Merrill Lynch (NYSE:BAC) Mei Yin Merrill also released a report this week that Italy group lacked sustained product innovation and R & D capability, and lost its peers. At the same time, it said that the market was expecting too much of the company. The bank believes that Prada's EBIT growth will not rebound significantly this year.

Mei Yin Mei Lin said, from the first quarter results, Prada counterparts

Gucci and Louis Vuitton Louis have registered strong growth, while Prada is expected to grow only moderately, and Miu Miu is inferior to peers.

Merrill Lynch said at the same time that the luxury market is expected to grow by 8% this year, and that Prada will lose market share further.

According to the world clothing and shoe net, in the first quarter of 2017, the revenue growth and organic growth of LVMH Mo t Hennessy Louis Vuitton SE (MC.PA) road fashion group and leather products department were 15%, while the Gucci Gucci parent Kering SA (Gucci) group opened up a 34% increase in the first quarter of the luxury goods sector, an increase of 31.6%.

The Prada group, which did not disclose quarterly results, included 2016 in the first quarter of 2017, with a sharp drop of 10.3% to 3 billion 184 million euros and a 9% decline in fixed exchange rates.

Bank of America Merrill Lynch also said in the report that in the current fiscal year, Prada group needs at least a median income growth to achieve operational leverage. The market expects the group to increase EBTT by 16% this year, but the group's sales remain weak, so it needs at least 22 million euros to achieve the above expectations. While Merrill Lynch expects Prada group to fail to do so, it is unlikely that this year will substantially reduce costs.

According to statistics, in the 2016 fiscal year, Prada Group recorded a 431 million 200 thousand euro under the streamlining plan for cost reduction, although it fell by 14.3% compared with 5.029 euros in the 2015 fiscal year, but its decline was less than net profit. It only declined for three years in a row. However, the EBIT profit rate continued to decline, from 2014 to 2015 in fiscal year 19.8% and 14.2% to 2016 in fiscal year 2015.

During the period, the group's gross profit was 2 billion 289 million 100 thousand euros, down 10.8% from the 2 billion 567 million 600 thousand euro in the 2015 fiscal year, and the gross margin fell 50 basis points to 71.9%.

EBITDA recorded 653 million 400 thousand euros, down 27.6% from the 802 million 800 thousand euro in fiscal 2015, and the EBITDA profit margin 20.5% plummeted by 210 basis points.

UBS's report in mid month is similar to that of Merrill Lynch. UBS said Prada's fundamentals are very poor. In the face of the strong performance of rival Gucci Gucci, the market share will further shrink in the future.

The target price for Prada group and Merrill Lynch to Prada group is HK $25 and HK $20 respectively, compared with the group's closing price of HK $28.90, which has 13.5% and 30.8% respectively.

Since the second half of 2016, Prada's stock price has continued to rise with the help of the industry recovery under the extremely weak fundamentals. The fashion industry research and investment agency No Agency has warned investors that the share price of Italian company shares a serious departure from the fundamentals. It is considered that Prada is most likely to be separated from the first group led by Louis Vuitton, Gucci, Hermes and Coach in the luxury industry.

More interesting reports, please pay attention to the world clothing shoes and hats net.