20141202-高盛-Removed_from_Asia_Pacific_Buy_List_11页_432kb

Samsonite International SA (1910.HK) Summary

Core Content

Samsonite International SA (1910.HK) has been downgraded from Buy to Neutral by Goldman Sachs due to concerns about its performance in the next 12 months. Despite being viewed as a structural winner in the industry with growth opportunities from the American Tourister brand and acquisitions, the company's EPS growth is expected to slow from mid-teens to low teens, and its valuation is near the historical peak.

Main Points

• Downgrade to Neutral: The stock has been downgraded from Buy to Neutral due to concerns about outperformance in the next year.
• Long-term industry winner: Samsonite is considered a long-term winner due to industry tailwinds, growth opportunities, and a strong management team.
• Valuation concerns: The current NTM P/E ratio is at 20X, close to its historical peak. While it trades at a 25% discount to Nike, the re-rating may be difficult due to slowing EPS growth.
• EPS growth forecast: The company's EPS growth is expected to slow from 18% in 2014E to 14% in 2015E, which is still healthy but below previous levels.
• Target price: The 12-month target price has been revised to HK$26.20 from HK$26.70, based on a 19X 2015–16E P/E multiple.

Key Information

• Current price: HK$25.90
• 12-month price target: HK$26.20
• Market cap: HK$36,444.8 million / US$4,699.3 million
• EPS revisions:
  • 2014E: +1%
  • 2015E: -6.7%
  • 2016E: -8.4%
• EPS growth (2015E): 13.7% (vs. consensus 14%)
• P/E (analyst): 19.8X (2015E), 17.8X (2016E)
• P/B: 3.3X (2015E), 3.0X (2016E)
• EV/EBITDA: 10.7X (2015E), 9.5X (2016E)
• Dividend yield: 2.3% (2015E), 2.5% (2016E)
• ROE: 17.2% (2015E), 17.4% (2016E)
• CROCI: 17.5% (2015E), 18.4% (2016E)

Investment View

• Valuation: The company's valuation is near its historical peak, and while it is still at a discount to Nike, continued re-rating may be difficult due to slowing earnings.
• Growth opportunities: The company's growth is driven by the American Tourister brand and acquisitions.
• FX impact: A strong dollar is a headwind for Samsonite due to its sourcing from China and sales in Europe, which is 25% of its revenue.
• A&P investments: Management is increasing A&P investments, which may affect margins and EPS growth.

Key Risks

• Macroeconomic conditions: Better or worse than expected macroeconomic conditions.
• GPM/OPM: Better or weaker than expected gross margin and operating margin.
• Investment impact: Higher investments may hit margins more than expected.

Financial Highlights

Growth and Margins

Currency Exposure

Market Performance

• 3-month return: -2.3%
• 6-month return: +6.4%
• 12-month return: +10.4%
• Relative to Hang Seng Index: +2.3% (3-month), +3.8% (6-month), +12.2% (12-month)

Summary

Samsonite remains a strong brand with good growth prospects and a solid management team. However, the company faces challenges in the next year due to increasing A&P investments and FX headwinds. Despite its strong track record, the valuation is near peak, and EPS growth is expected to slow. The company's target price has been revised to reflect these concerns.