1Q24 results fell short of our expectations
Samsonite announced 1Q24 results: net revenue of US$860 million, up 4% year-on-year at fixed exchange rate (CER) (up 18% compared to 1Q19), adjusted EBITDA of US$161 million (profit margin of 18.8% vs. 1Q23 18.4%), and adjusted net profit of US$87.1 million (vs. 1Q23 US$81.2 million). Results fell short of our expectations, mainly due to lower sales and higher distribution rates in the European market.
Development trends
At the performance meeting, management stated:
1) 2Q24 performance so far: The year-on-year revenue growth rate in April improved compared to 1Q24. 2) Financial guidance for 2024: In view of the gradual slowdown in travel growth in the inflationary environment, the company slightly lowered its revenue growth guide to a high single digit to 10% (previously the guideline was high single digit to low double digit), including high single digit growth of 1H24 and low double digit growth of 2H24. The company maintains the adjusted EBITDA margin expansion guidelines of 20-30 bps. 3) As of 1Q24, the company's net debt was US$1.08 billion, cash and equivalents were US$744 million, and the net leverage ratio was 1.48 times. Management proposed a cash dividend of US$150 million in July 2024, corresponding to a dividend rate of 2.8%. 4) The management is proceeding with the second listing, but it is still in the early stages of discussion, and there is no clear timeline.
Profit forecasting and valuation
Taking into account the slowdown in travel demand, we lowered our 2024 and 2025 revenue forecasts by 3% to $3.99 billion and $4.45 billion. In view of better-than-expected profit margin expansion, we have generally kept our net profit forecast unchanged. We maintain our outperforming industry rating and target price of HK$38, based on 14 times the 2024 price-earnings ratio, corresponding to 12 times the 2025 price-earnings ratio. The current stock price corresponds to 11 times and 9 times the 2024 and 2025 price-earnings ratios, and the target price corresponds to 32% upward space.
risks
Macro adverse factors; asset impairment losses; more intense external competition, competition among internal brands; foreign exchange rate risk; possibility of secondary listing.