Bank of America Securities released a research report stating that it reaffirmed Samsonite's (01910) “buy” rating, and the target price was reduced from HK$26.8 to HK$24. The company's stock price has lagged 44% behind the Hang Seng Index since the beginning of the year, which is believed to reflect the risk of earnings per share. The total shareholder return is likely to reach 10%, providing good support for the share price.
According to the report, Samsonite's third-quarter results fell short of expectations. It is expected that there will be a recovery in the fourth quarter. The adjusted EBITDA forecast for this year and next two years was lowered by 6%, as well as profit forecasts by 11% and 13%, respectively, to reflect the quarterly results. Management expects organic sales for the whole of this year to be the same as last year, which means that sales growth in the fourth quarter was medium units, while the trend has improved since the fourth quarter, mainly due to the stimulus measures of the mainland government and the low base in the fourth quarter of last year.
Looking ahead to 2025, the company can resume its sales growth and gross profit expansion, and begin to benefit from the company's investment in strengthening brands, product innovation, non-travel products, and direct-to-consumer channels.
