Independent Equity Research

We   maintain   our   Underperform   rating   amid   mixed   Q3   results   and   soft  underlying  sales  with  just  2%  at  group  level.  Moncler  also  had  a  soft  start  to  Q4  due  to  adverse  weather  conditions  and  ongoing  protests  in  Hong  Kong.  The  related  travel  restrictions  imposed  on  Chinese  mainlanders  will  have  a  more   sustainable   impact.   However,   after   the   recent   share   price   slide,  downside  seems  limited  and  we  maintain  a  target  price  of  EUR10  per  share.    

Mixed  Q3  results  Q3   group   sales   increased   slightly   ahead   of   our   expectations   by   12-­‐13%   to  EUR231m  (vs.  Hammer  est.  of  EUR227m)  spurred  by  growth  in  the  US  and  Europe  despite   lower   sales   in   Italy   due   to   a   reorganisation   of   the   wholesale   business.  However,   overall   like-­‐for-­‐like   sales   in   Q3   were   soft,   up   just   2%   at   group   level.  Additionally,   EBIT   increased   by   9.7%   to   EUR82m   but   fell   short   of   our   EUR85m  estimate  on  greater-­‐than-­‐expected  margin  pressure.      Trend  continued  with  a  soft  start  to  Q4  Moncler   had   a   soft   start   to   Q4   amid   ongoing   adverse   weather   conditions   and  protests   in   Hong   Kong.  While  Moncler   generates   less   than   5%   of   sales   in   Hong  Kong   (less   than  most   industry   peers),   protests   there   are   increasingly   a   burden.  With   fully   50%   of   Moncler’s   Hong   Kong   sales   derived   from   mainland   Chinese  tourists,  the  impact  of  recently  imposed  visa  restrictions  is  expected  to  continue.  

Underperform  reiterated  The  recent  share  price  decline  has  seen  Moncler  approach  our  target  price.  Still,  on  a  PE  basis  the  stock  trades  at  a  13%  premium  to  sector  peers.  For  now  we  keep  our   Underperform   rating,   as   sector   news   flow   remains   clouded   and   margin  pressure  likely  continued.  

 

Rating Target Price

Closing Price Market Cap

12 Nov. 14

Underperform EUR10

EUR10.75 EUR2.67bn

Moncler Soft underlying sales confirmed

Research Analyst

Stephan Seip +41 78 658 9162

stephan.seip@hammer-partners.com

Pan-European Equity Sales +41 919 240 160

sales@hammer-partners.com

Financials overview

3

Margin pressure mounts

Moncler   is  a  monolabel   retail   rollout   story   in   the   luxury  segment  with  a  current   network   of   114   stores   and   around   20   new   openings   a   year.  Moncler   specialises   in  premium  outdoor  wear,   primarily   Its   iconic  down  jackets   that   are   designed   in   Italy,   produced   in   Eastern   Europe   and  represent   85%   of   group   sales.   The   company   is   currently   expanding   and  diversifying   its   product   portfolio   to   include   knitwear   and   accessories,  activities  it  hopes  can  generate  30%  of  group  sales  by  2016E.  

Q3 like-for-like sales, EBIT margin softer than expected Q3  group   sales   increased   slightly  ahead  of  our  expectations  by  12-­‐13%   to  EUR231m  (vs.  Hammer  est.  of  EUR227m),  spurred  by  growth  in  the  US  and  Europe  despite  lower  sales  in  Italy  due  to  a  reorganisation  of  the  wholesale  business.  However,   like-­‐for-­‐like  sales  were  soft   in  Q3,  up   just  2%  at  group  level.  Additionally,  EBIT  increased  by  9.7%  to  EUR82m  but  fell  short  of  our  EUR85m  estimate  on  greater-­‐than-­‐expected  margin  pressure.    

Q4  still  burdened  by  weather,  HK  protests,  visa  restrictions  

Moncler  had  a  soft  start  to  Q4,  as  adverse  weather  conditions  and  ongoing  protests  in  Hong  Kong  continue  to  weigh  on  sales.  While  Moncler  generates  only  5%  of  its  sales  in  Hong  Kong  (less  than  most  industry  peers),  protests  there  are  having  an  impact.  Furthermore,  with  fully  50%  of  Moncler’s  Hong  Kong  sales  derived  from  mainland  Chinese  tourists,  recently  imposed  visa  restrictions  are  expected  to  weigh  further.  

4

Quarterly results

 

 

5

 

Valuation  

 The  recent  share  price  decline  has  seen  Moncler  approach  our  target  price.  Still,  on  a  PE  basis  the  stock  trades  at  a  13%  premium  to  sector  peers.  For  now  we  keep  our  Underperform  rating,  as  sector  news  flow  remains    clouded  and  margin  pressure  looks  set  to  continue.    

Peer group valuation

 

6

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