UBS Lowers Samsonite's Target Price to HK$22.7, Citing Excessive Valuation Drop

Stock News
04/14

UBS has revised down its target price for Samsonite (01910) from HK$23.3 to HK$22.7 while reaffirming its "Buy" rating. The bank believes the current valuation is attractive and expects a dividend yield of approximately 5% by 2026. A potential dual listing in the U.S. is anticipated to support a revaluation of the stock. Samsonite's share price has declined around 25% year-to-date, impacted by factors including rising oil prices pressuring margins, Middle East geopolitical tensions affecting travel demand, reduced flight availability and higher airfares, weaker-than-expected Q1 revenue guidance, potential delays in dual listing, and management changes such as the retirement of Chairman Tim Parker. UBS views the recent valuation drop as exceeding fundamental weaknesses. The bank forecasts that Samsonite's upcoming Q1 results, due on the 13th of next month, will largely align with guidance, showing flat net sales growth year-on-year on a constant currency basis. Sales in Asia are expected to grow 1%, European sales to remain flat, and North American sales to decline by a low single-digit percentage. Favorable currency effects are projected to boost reported net sales by 2.6% year-on-year. Gross margin is anticipated to contract modestly by 30 basis points to 59.1%, while advertising expenses are expected to account for 6% of net sales, below the full-year target of 6.5%. UBS has trimmed its 2026–2028 profit forecasts by 2%, reflecting slightly lower gross margin assumptions. Full-year reported sales growth is projected at around 3%, with an acceleration expected in the second half. Adjusted EBITDA margin is forecast to remain stable at 16.3% this year and between 16.3% and 16.4% in the following two years.

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