A global leader in the luxury industry, its many fashion brands are redefining contemporary luxury. The Prada Group is a global leader in the luxury industry and a pioneer in unconventional dialogue with contemporary society in different cultural fields. The company owns famous brands such as Prada, MiumiU, Church's, CarShoe, Marchesi1824, and LunaRossa.
In 2023, the company's revenue was 4.726 billion euros, an increase of 12.5%, and net profit of 671 million euros, an increase of 44.3%. The performance was high. Revenue for 2019-2023 was 32.26/24.23/33.66/42.01/4726 billion, respectively, and GAGR was 10.02%. Net profit for 2019-2023 was 2.56/-0.54/2.94/46/671 million euros, respectively, with a CAGR of 27.2%, and the performance is improving steadily. In 2023, the company achieved outstanding performance with the support of its brands continuing to innovate. The company's performance growth was mainly due to significant progress in strategy, organization and digital development. As of '23, the company had 12 consecutive quarters of retail growth, driven by full price and year-over-year sales, which contributed positively to both sales volume and average price.
China is leading the market growth, and the share of overseas consumption is declining. Chinese consumers are one of the main drivers of the global luxury market, and their share of the global market continues to grow. The Huajing Industry Research Institute estimates that in 2011-2021, China's luxury goods market expanded from 150 billion US dollars to 41 billion US dollars, with a CAGR of 14.4%. According to data from the Key Guest Research Institute, in 2023, Chinese luxury goods consumption broke out of 2022 pressure and resumed growth to 1042 billion yuan, reaching 2019 levels, returning to the trillion yuan market size. Chinese luxury goods consumption still accounts for around 38% of global luxury consumption. There has been no major change. Chinese consumers are still the most important force in global luxury consumption.
Strong players in the luxury goods industry are strong, and leading brands are more popular. With overall consumer intentions declining and overall market competition becoming more intense, the Matthew effect among luxury brands was further amplified, and leading luxury brands ushered in a new wave of expansion. Top luxury brands are creating more private and exclusive shopping experiences through larger, more high-end differentiated spaces, and their expansion is crowding out the space of some high-end brands. More well-known and larger luxury brands will get more market opportunities in the future.
According to the Deloitte report, among the top 100 global luxury companies in 2023, 17 companies with sales exceeding $5 billion contributed about 70% to total sales, while 43 companies with sales of $1 billion or less contributed only 6.4%.
According to the “2022 World's Best Brands” ranking published by Interbrand, Prada recorded a year-on-year value growth rate of more than 20% for two consecutive years, ranking among the top 15 brands with the fastest value growth. Furthermore, in Lyst's October to December 2022 quarterly rankings, Prada topped the list, while Miu Miu ranked fourth. Lyst is a data analysis tool that publishes reports on current most popular brands and products every quarter based on an analysis of the purchasing habits of more than 200 million consumers around the world. According to Lyst's data, Miu Miu was named “Brand of the Year 2022”: the 2022 Fall/Winter Fashion Show was a huge success, highly praised by critics and the public, and launched iconic products to increase the brand's popularity on social media, which also depended on the support of celebrities.
Covered for the first time, a “gain” rating was given. In 2023, Prada continued to be favored due to continuous optimization of the organization and strict execution. Relying on continuous innovation and the ability to successfully interpret contemporary fashion, a balanced portfolio of product categories can drive growth and maintain stability. We expect the company's 24-26 revenue to be 51.06/55.25/6.01 billion euros, respectively, net profit of 736/800/883 million euros, EPS 0.29/0.31/0.34 per share, and corresponding PE 27/25/23x, respectively.
Risk warning: talent management and retention risk; intellectual property and brand protection risk; commercial attractiveness and popularity risk; corporate image risk; supply chain management risk; business soundness risk; liquidity risk; foreign exchange risk; interest rate risk; estimation is subjective risk, etc.