The 3Q is the most important for the company accounting for over 50% of the annual profit. We reiterate our buy.
We added The Swatch Group (UHR VX: CHF 136.00) to our recommendation list with a target price of CHF 158.00. Our investment case is based on: 1) valuation (at a P/E 04E of 13.4x and an EV/EBITDA 04E of 7.2x, the stock trades at the low end of the historical 20-40% discount vs the luxury goods sector) and 2) earnings and margin upside in the 2nd half of 2003 due to signs of improving demand and cost measures coming into effect.
IH 2003 results were in the range of LVMH's, but stronger than Richemont's or Bulgari's suggesting that Swatch had gained market share. Management sees encouraging signs of improving demand in July/August from the retailers and estimates inventories in the trade have more or less returned to normal levels. In addition the product mix strategy looks promising with more and more products being positioned at the higher end of the pricing range.
In general, we would look for a balanced portfolio with some defensive names such as Nestle (NESN VX; CHF 305.00), selected higher beta plays such as Siemens (SIE GY; EUR 56.40) and selected exposure to consumer goods such as Adidas-Salomon (ADS GY: EUR 76.27) and Swatch (UHR VX; CHF 136). Our call on dividend yield remains intact with the following counters:
Total (FP FP; EUR 139.70) 2.94%
ENI (ENI IM; EUR 13.76) 5.43%
Restructuring play in auto sector:
DaimlerChrysler (DCX GY; EUR 34.69) 4.32%
Restructuring/German play in engineering sector:
MAN (MAN GY; EUR 20.00) 3.00%
Value/Restructuring play in commodity sector:
Arcelor (LOR FP; EUR 11.75) 3.23%
Browse
related articles
Finding value in current markets (page 3 of 3)
- Tuesday, September 02 - 2003 at 13:46
Related content
Article Options
Credit Suisse, Private BankingTuesday, September 02 - 2003 at 13:46 UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of AME Info FZ LLC / 4C.
This article was updated on Wed May 09 2007.
Disclaimer »
The information comprised in this section is not, nor is it held out to be, a solicitation of any person to take any form of investment decision. The content of the AMEinfo.com Web site does not constitute advice or a recommendation by AME Info FZ LLC / 4C and should not be relied upon in making (or refraining from making) any decision relating to investments or any other matter. You should consult your own independent financial adviser and obtain professional advice before exercising any investment decisions or choices based on information featured in this AMEinfo.com Web site.
AME Info FZ LLC / 4C can not be held liable or responsible in any way for any opinions, suggestions, recommendations or comments made by any of the contributors to the various columns on the AMEinfo.com Web site nor do opinions of contributors necessarily reflect those of AME Info FZ LLC / 4C.
In no event shall AME Info FZ LLC / 4C be liable for any damages whatsoever, including, without limitation, direct, special, indirect, consequential, or incidental damages, or damages for lost profits, loss of revenue, or loss of use, arising out of or related to the AMEinfo.com Web site or the information contained in it, whether such damages arise in contract, negligence, tort, under statute, in equity, at law or otherwise.
