The expansion of the middle class population is expected to guarantee the steady growth of the luxury goods market, benefiting from the rejuvenation of luxury buyers and the gradual expansion of the middle class population. China's share of consumption in the global luxury market will expand accordingly. The global luxury goods market is expected to reach 2.3 trillion yuan in 2023, of which the Chinese luxury goods market accounts for 25%. According to BCG's forecast, from 2022 to 2030, China is expected to add 80 million new middle class people and above, and the expansion of the middle class population is expected to further increase the size of the luxury goods market. According to Mob Research's “Post-90s Luxury Consumer Insights”, the global luxury goods market is expected to reach 3.3 trillion yuan in 2030. China's luxury consumer market is expected to account for 40% of the global market, and is expected to surpass Europe and the US as the world's largest single market.
The acquisition of an international brand in 2023 complements Bienleven
The company owns the main brand of Bienleven, the Bienleven golf brand, the Venice Carnival brand, and two newly acquired international luxury brands: CERRUTI 1881 and KENT & CURWEN, which can meet the dress needs of middle class people and above in one stop. The newly acquired CERRUTI 1881 has a 142-year brand history, and KENT & CURWEN has a brand history of nearly 100 years. The two international brands complement Bienleven in terms of brand influence and popularity, further promoting the diversification, internationalization, and high-end layout of the company's brands, laying the foundation for the company to build a global luxury goods group.
Brand advantage and channel expansion. The company's performance has been growing steadily over the years. The current valuation is low in 2022 and the first half of 2023. The number of new stores opened by the company is 91 and 47, respectively. Benefiting from channel expansion, increased brand awareness, and mergers and acquisitions of overseas luxury brands, the company's performance has maintained steady growth over the past few years. Compared with the PE (TTM) valuation percentile, the company's PE (TTM) was 19.30 on January 18, and the PE percentile was 18.24%. Currently, PE has been lower than 81.76% in the past three years, and the current valuation is low.
Company profit forecasting and valuation
The company's revenue for 2023-2025 is estimated to be 35.73 billion yuan, 42.84 billion yuan, and 5.137 billion yuan, YOY is 23.87%, 19.90%, and 19.91%, respectively; EPS is 1.63, 1.98, and 2.39 yuan respectively. Based on reasonable valuation estimates, combined with stock price catalysts, the company is given a target price of 37.49 yuan/share within six months, giving the company a “recommended (first)” investment rating.
Investment risk tips
Risks of production outsourcing, management risks brought about by marketing network expansion