Berenberg picks Brunello Cucinelli, Hermès and LVHM in luxury sector initiation
** Berenberg starts coverage of seven European luxury goods companies, saying it favours "buy"-rated absolute and soft luxury firms Brunello Cucinelli, Hermès and LVMH, while advocating a "defensive stance"
** With the market growth set to moderate, market share gains are critical for the luxury names, it says
** It expects companies exposed to the absolute luxury segment and those well-positioned for market share gains to be the winners, while the aspirational segment will remain under pressure
** "China matters a lot," the broker says, as the Chinese market now accounts for 22% of industry revenues and is expected to reach 60% by 2030
** But China spend comes with risks as the headwinds it faces might be more secular than cyclical, given debt, demographics and politics, the broker says
** It adds consumer behaviour in China has also shifted to be less brand loyal and more value driven
** Its least preferred segment is watches due to high capital requirements, currency fluctuations and more volatile demand in China
BERENBERG'S INITIATIONS:
COMPANY | RATING | PT |
|---|---|---|
Brunello Cucinelli BCU.MI | Buy | EUR 110 |
Hermès HRMS.PA | Buy | EUR 2,330 |
LVMH LVMH.PA | Buy | EUR 695 |
Kering PRTP.PA | Hold | EUR 230 |
Moncler MONC.MI | Hold | EUR 57 |
Richemont CFR.S | Hold | CHF 140 |
Swatch UHR.S | Sell | CHF 165 |
Reporting by Michela Stasio
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