Samsonite announced its share repurchase plan. The company plans to repurchase no more than US$200 million (approximately HK$1,562 million at the exchange rate of US$1 to HK$7.8097). This is the first repurchase since the company went public in Hong Kong.
Based on the assumption of the closing price of the shares on June 6, the repurchase capital accounts for 4.34%, and the repurchase amount accounts for 4.4% of the market value.
The repurchase period starts on June 7, 2024 and ends on the date of the next Annual General Meeting of Shareholders of the Company to be held in 2025 (including the first and last two days).
The buyback program shows the board's long-term confidence. The board of directors believes that the current stock price of the company is below its intrinsic value, and the repurchase plan reflects the board's confidence in the company's long-term business and growth prospects.
The plan helps offset the dilution effects of previous share options granted by share awards. The share repurchase plan will help offset the dilution effect of the grant of share options under the 2012 and 2022 share award schemes, respectively.
The company passed two share award plans in 2012 and 2022, respectively. The authorized limits are 10% and 5% of the company's issued share capital on the shareholders' approval date, respectively. The incentive program aims to attract talents, motivate retention, and encourage efforts to grow and expand the Group by providing opportunities to acquire shares in the company. The plan allows the Remuneration Committee to determine the recipient of the award, and the award takes the form of share options and/or restricted share units.
Global travel continues to pick up and will continue to grow steadily. According to the Samsonite announcement, citing ACI data, global passenger travel is expected to reach 106% in 2019, and the CAGR of global travelers is expected to reach 9.1% in 23-26. According to TSA data, from January to May '24, the number of US air passengers increased by 4.5%/6.0%/6.1%/5.8%/7.7%, respectively, compared to the same period before the pandemic ('19), and the recovery trend continued.
Profit forecasting and valuation. We believe that the company ① has a stable position as the world's largest luggage leader, ② the opening of Tumi stores has potential for medium to long term growth in the Asia-Pacific region, ③ debt leverage and cash flow output continue to improve, and ④ overseas dual listing is beneficial to valuation repair. We anticipate 2024/2025 net profit of US$463,512 million, giving the company a 2024 PE valuation range of 14-15X, corresponding to a reasonable value range of HK$34.73-37.21 per share based on the US dollar = HK$7.83 exchange rate, maintaining a “superior to market” rating.
Risk warning. The global epidemic is not under stable control, the retail environment is weak, and the recovery in travel consumption falls short of expectations.