Not vested
For the valuation of PRADA Group, we adopted the financial multiplier valuation model with focus on P/E ratio. We believe as the luxury goods industry is a globalized, mature and well-covered industry, the comparison can truly reflect intrinsic value of PRADA Group.
In our valuation of PRADA Group, we take the following factors into consideration:
- We take the average of growth trend of the new DOS stores sales, geographical sales, sales by network and sales by product
- Gross profit margin further improves in a minor amount
- An increase in operating cost by the trend
- A decrease in interest expense reflecting the IPO effect
- A constant tax rate
- Use the average P/E ratio of the peers as reference.
We forecast the leading P/E for PRADA Group to be 20.4x and EPS of EURO 0.123.
With the IPO price of HK$36.5 – HK$48, the implied leading P/E would be 26.08x – 34.3x, representing a 21.8% - 32.4% downside risk.
We give PRADA Group a 12-month target price of HK$28.5 and a not subscribe rating.
Source: Phillips