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occurrences
The stock price of L'Occitane (973.HK) fell by 28.4% on September 5, 2023, and on September 4, Board Chairman Reinold Geiger decided to stop promoting privatization.
1. On July 25, 2023, as reported by Bloomberg, L'Occitane's controlling shareholder and board chairman Reinold Geiger plans to privatize the company and re-list it on another stock exchange. The company denied the rumor on July 27th.
2. On August 9, 2023, Bloomberg reported that Mr. Geiger plans to launch the acquisition as early as September 2023 at a price of about HK$35 per share. The company suspended trading from August 9 to August 14, and clarified that Mr. Geiger was considering a possible acquisition, but had no clear plans (structure, financing, timing, purchase price), and stated that the potential acquisition price would be no less than HK$26 per share.
3. On September 4, 2023, one day after the company was suspended, Mergermarket reported that Mr. Geiger had obtained a loan of $1 billion and formed a takeover consortium with equity pledges of around $400 million. On the evening of the same day, the company announced that Mr. Geiger had decided to stop advancing possible privatization deals.
reviews
According to our channel research, benefiting from enhanced marketing and promotion of major brands, the company's July performance may exceed our expectations. We expect the company's July revenue to increase by about 30% year over year at a fixed exchange rate (1QFY24 up 25%). We expect LEP revenue to increase 4-5% year-on-year at the fixed exchange rate in July (similar to 1QFY24); benefiting from cooperation with anchor Li Jiaqi, we expect LEP China's revenue to increase by about 30% in July; ELEMIS revenue is expected to increase 15-20% year-on-year at the fixed exchange rate in July (1QFY24 up 24%), due to short-term negative effects of US transportation issues; driven by China's online channels, ELEMIS Asia Pacific's July revenue is expected to increase by more than three digits; Benefiting from strong performance in the US market, SDJ revenue is expected to increase by more than three digits year-on-year in July 200% (1QFY24 increased 171%).
Based on the above, we raised the company's FY24 and FY25 revenue forecasts by 6% and 4% to 2.6 billion euros and 2.9 billion euros, and the FY24 and FY25 net profit forecasts by 10% and 4% to 252 million euros and 323 million euros. We maintained our outperforming industry rating and raised our target price by 17% to HK$28 (corresponding to 20% upside), corresponding to a price-earnings ratio of 19 times FY24. The current stock price is HK$23.25, corresponding to 15.5 times and 11.9 times the FY24 and FY25 price-earnings ratios.
risks
ELEMIS volume fell short of expectations; repeated COVID-19 outbreaks; risk of exchange rate fluctuations.