Core Viewpoint - The investment bank maintains an "outperform" rating for Prada (01913) but has lowered the target price by 6.3% to HKD 75 due to ongoing weakness in the luxury goods sector and uncertainties surrounding the integration of Versace [1] Group 1: Financial Performance - Prada Group reported a 9% year-on-year increase in net revenue for 1H25, reaching EUR 2.74 billion, in line with FactSet consensus expectations [2] - Gross margin improved to 80.1% in 1H25 from 79.8% in 1H24, driven by higher operational efficiency and lower logistics costs [2] - EBIT grew by 6% year-on-year to EUR 607 million, with an EBIT margin of 22.2%, slightly below FactSet consensus of EUR 631 million due to non-recurring expenses related to the Versace acquisition and increased marketing costs [2] - Net income stood at EUR 386 million, with a net margin of 14.1%, remaining stable year-on-year primarily due to timing adjustments in tax payments [2] - As of June 30, 2025, the group held net cash of EUR 352 million [2] Group 2: Growth Drivers and Outlook - Despite uncertainties regarding the Versace integration, the bank believes that excluding Versace, Prada Group could be one of the best-performing luxury companies in 2025, with expected revenue growth above industry average and rare EBIT margin expansion potential [1] - Key growth drivers include the expansion of retail space for the Prada and Miu Miu brands, expected to accelerate in 2H25, increased production of Miu Miu leather goods, and maintaining creative consistency while many peers undergo design transformations in 2025 [1] - The current valuation of Prada Group is considered attractive based on the 2025 earnings outlook and long-term prospects [1]

Core Viewpoint - Prada's performance in the first half of the year was slightly below expectations, with revenue of €2.74 billion, which is 2% lower than both the bank's and market's forecasts [1] Group 1: Financial Performance - Prada's retail net sales for the Prada and Miu Miu brands were slightly below expectations, with a decline of 3.6% for Prada and an increase of 40% for Miu Miu [1] - The company's sales increased by 9% year-on-year when calculated at constant exchange rates, aligning closely with Macquarie's predictions [1] - Net profit increased by 0.6% year-on-year, which was 7% lower than Macquarie's forecast due to non-recurring costs associated with the acquisition of Versace [1] Group 2: Market Conditions - The demand for travel consumption has been under pressure in the third quarter, with Miu Miu facing the most significant year-on-year comparative base pressure [1] - Management expects overall tourist traffic in Japan and Europe to stabilize year-on-year by the end of August [1] Group 3: Strategic Outlook - The company aims to prioritize enhancing brand value and believes there is still room for improvement in profitability through operational leverage [1] - Management believes that Miu Miu's penetration rate remains low in many countries, indicating potential for further improvement in product categories and combinations [1]

Core Viewpoint - Prada's performance in the first half of the year was slightly below expectations, with net retail sales for both the Prada and Miu Miu brands not meeting forecasts, leading to a decline in stock price [1] Financial Performance - Prada reported revenue of €2.74 billion, which was 2% lower than both the bank's and market expectations [1] - The retail net sales for Prada decreased by 3.6%, while Miu Miu's sales increased by 40% [1] - Sales growth for Prada, when adjusted for fixed exchange rates, was 9% year-on-year, aligning closely with the bank's predictions [1] Profitability and Costs - The gross margin exceeded expectations due to channel structure optimization, but net profit was below expectations due to costs associated with the acquisition of Versace and weak sales [1] - Net profit increased by 0.6% year-on-year, which was 7% lower than the bank's forecast [1] Market Trends and Future Outlook - The management anticipates that tourism consumption demand will remain under pressure in the third quarter, with Miu Miu facing significant year-on-year comparison challenges [1] - Management expects overall tourist traffic in Japan and Europe to stabilize by the end of August [1] - There is a belief that Miu Miu has low penetration rates in many countries and potential for further improvement in product categories and combinations [1]

Core Viewpoint - Prada Group's 1H25 performance shows a mixed result with net income growth but EBIT falling short of market expectations, indicating potential challenges ahead [1][2] Financial Performance - Net revenue for 1H25 increased by 9% year-on-year to €2.74 billion, aligning with FactSet consensus [1] - EBIT grew by 6% year-on-year to €607 million, with an EBIT margin of 22.2%, slightly below the expected €631 million [1] - Gross margin improved to 80.1% in 1H25 from 79.8% in 1H24 due to higher operational efficiency and lower logistics costs [1] - Net income stood at €386 million with a net margin of 14.1%, down from 15.0% in 1H24, primarily due to tax payment timing adjustments [1] Development Trends - Despite uncertainties surrounding the integration of Versace, Prada Group is expected to be one of the best-performing luxury companies in 2025, with anticipated revenue growth above industry average and potential EBIT margin expansion [1] - Key growth drivers include retail space expansion for Prada and Miu Miu brands, increased volume of Miu Miu leather goods, and maintaining creative consistency amid design transformations in the industry [1] Earnings Forecast and Valuation - The financials of Versace have not yet been incorporated into the group's reports, pending transaction completion expected in 2H25 [2] - The target price has been reduced by 6.3% to HKD 75, reflecting ongoing challenges in the luxury sector and uncertainties related to the Versace integration [2] - The target price corresponds to a 2025 P/E ratio of 22.6 times and a 2026 P/E ratio of 18.9 times, with current stock price reflecting a significant upside potential of 60.3% [2]

Core Insights - LVMH and Kering reported declines in their performance for the first half of the year, while Prada Group experienced growth, highlighting a divergence in the luxury market [2][6][7]. Financial Performance - Prada Group's net revenue for the first half of 2025 reached €2.74 billion, reflecting a 9% increase year-over-year at constant exchange rates [2][3]. - Retail sales net revenue grew by 10.1% year-over-year, while net profit slightly increased to €386 million, up 0.62% [2][4]. - The Prada brand saw a decline in retail sales net revenue by 1.9%, while Miu Miu's retail sales surged by 49.2%, contributing significantly to the group's overall performance [2][4][10]. Brand Performance - Miu Miu has entered a high-growth phase, with a retail sales net revenue increase of 92.7% in 2024, and it now accounts for nearly 32% of Prada Group's total retail sales net revenue [4][15]. - Despite Miu Miu's strong performance, the growth rate has slowed compared to previous years, indicating potential challenges ahead [16][18]. Regional Performance - Prada Group achieved growth across all regional markets, with the Middle East showing the fastest retail sales growth at 26% year-over-year [10][12]. - In the Asia Pacific region, retail sales net revenue increased by 10.4% to €838 million, while Europe, the Americas, and Japan also reported positive growth rates [12][10]. Market Dynamics - The luxury market is experiencing a slowdown, with major brands like LV and Gucci facing challenges, while Prada Group's strategic focus on brand positioning and younger consumer engagement has allowed it to thrive [14][15]. - The shift in consumer preferences towards brands like Miu Miu reflects a broader trend in the luxury sector, where younger generations are driving demand [16][18].

Core Viewpoint - In the first half of 2025, while major luxury brands like LVMH and Kering reported declines in performance, Prada Group experienced growth, driven primarily by its Miu Miu brand, which has seen significant sales increases [1][5][11]. Financial Performance - Prada Group reported a net income of €2.74 billion, a 9.1% increase year-on-year, with retail sales netting €2.45 billion, up 10.1% [1][5]. - The adjusted EBIT rose by 7.55% to €619 million, and net profit increased by 0.62% to €386 million [5][12]. - Prada brand's retail sales net income decreased by 1.9% to €1.65 billion, while Miu Miu's retail sales surged by 49.2% to €780 million [1][5][7]. Brand Performance - Miu Miu accounted for nearly 32% of Prada Group's total retail sales in the first half of 2025, marking a historical high for the brand [4][14]. - Miu Miu's retail sales growth has been robust, with a 92.7% increase in 2024, and it successfully entered the "€1 billion club" [4][14]. - Despite Miu Miu's strong performance, its growth rate has slowed compared to previous years, indicating potential challenges ahead [15][17]. Regional Performance - Prada Group achieved growth across all regional markets, with the Middle East showing the fastest retail sales growth at 26% [7][8]. - In the Asia-Pacific region, retail sales increased by 10.4% to €838 million, while Europe, the Americas, and Japan saw increases of 9%, 12%, and 4%, respectively [7][8]. Market Trends - The luxury goods market is experiencing a slowdown, with a report indicating the first decline in luxury consumption in 15 years, excluding the pandemic period [12]. - The shift in consumer preferences towards younger brands like Miu Miu suggests a changing landscape in luxury brand appeal [11][12].

Core Viewpoint - Miu Miu's recent advertisement featuring Kylie Jenner has sparked significant backlash on social media, raising concerns about the brand's choice of representation and alignment with its values [2][4][6] Brand Representation - Miu Miu's official statement emphasized that the advertisement aims to showcase a diverse representation of women's power, with Kylie Jenner bringing her own influence and style to the campaign [4][6] - Critics argue that Kylie Jenner's image does not align with Miu Miu's brand identity, which is characterized by subtlety, rebellion, and intellectualism, contrasting with her representation of commercial and social media culture [6][9] Financial Performance - Prada Group reported a 9% revenue growth to €2.74 billion for the first half of 2025, with Miu Miu being a key growth driver, showing a 40% revenue increase in Q2 and a 49% rise in retail sales to €780 million [8][9] - Despite Miu Miu's impressive growth, there are signs of a slowdown, with growth rates decreasing from previous highs of 93%, 105%, and 84% to the current 40%, indicating potential challenges ahead [9] Market Position and Challenges - Miu Miu's growth is primarily attributed to its smaller market base, and as it matures, future growth may be more challenging due to increased competition and market saturation [9] - The luxury goods industry is inherently conservative, making it difficult for brands to gain market share, and Miu Miu's growth ceiling may be limited by its association with Prada [9]

Group 1 - The core viewpoint of the report is that Citi has downgraded Prada's net profit forecast for 2025 to 2027 by 5% to 6% due to lower sales expectations for Prada and Miu Miu, along with increased advertising and promotional expenses and sales cost forecasts [1] - The valuation basis has been adjusted, with the expected enterprise value to EBIT ratio reduced from 13 times to approximately 9 times, and the target price lowered from HKD 72 to HKD 50, while maintaining an "outperform" rating due to Miu Miu's growing market share and attractive risk-reward ratio [1] - Prada's performance in the first half of the year was slightly below expectations, with revenue recorded at EUR 2.74 billion, which is 2% lower than both Citi's and market expectations, primarily due to slightly disappointing retail net sales for both Prada and Miu Miu brands, which fell by 3.6% and increased by 40% respectively [1] Group 2 - The optimization of channel structure has led to a gross margin that exceeded expectations, but the costs associated with the acquisition of Versace and weak sales have resulted in net profit falling below expectations [1] - The demand for travel consumption has continued to be under pressure in the third quarter to date, and Miu Miu is expected to face the most significant year-on-year comparative base pressure [1]

Core Viewpoint - Citi has downgraded Prada's net profit forecast for 2025 to 2027 by 5% to 6%, citing lower sales expectations for Prada and Miu Miu, alongside increased advertising and promotional expenses and sales costs [1] Group 1: Financial Performance - Prada's revenue for the first half of the year was €2.74 billion, which was 2% lower than both Citi's and market expectations [1] - Retail net sales for the Prada and Miu Miu brands were slightly below expectations, with Prada experiencing a decline of 3.6% and Miu Miu seeing an increase of 40% [1] - The gross margin exceeded expectations due to channel structure optimization, but costs related to the acquisition of Versace and weak sales led to net profit falling short of expectations [1] Group 2: Valuation and Target Price - Citi has adjusted its valuation basis, estimating the enterprise value to EBITDA at approximately 9 times, down from the previous 13 times [1] - The target price for Prada has been reduced from HKD 72 to HKD 50, while maintaining a "outperform" rating due to Miu Miu's growing market share and attractive risk-reward ratio [1] Group 3: Market Conditions - The demand for travel consumption has continued to face pressure in the third quarter, with Miu Miu expected to face the most significant year-on-year comparative base pressure [1]

Group 1 - Morgan Stanley predicts pressure on Prada's stock price, lowering the target price from HKD 66 to HKD 62 while maintaining an "Overweight" rating and listing it as an industry favorite [1] - The group performed well in the luxury goods sector during Q2, with continued optimism for the appeal and future growth potential of the Prada and Miu Miu brands [1] - The negative impact of international tourism is expected to peak in the summer, leading to potential downward adjustments in Q3 sales forecasts, with the latest prediction showing a fixed exchange rate growth of 8.3%, down from a previous forecast of 10.4% [1] Group 2 - Prada's Q2 performance fell short of expectations, with a year-on-year sales growth of 6.1% at fixed exchange rates, compared to 12.5% in Q1 and market expectations of 9% [1] - Revenue from both the Prada and Miu Miu brands was slightly below expectations, and although same-store sales grew by approximately 9%, there appeared to be a lack of operating leverage, resulting in adjusted EBIT for the first half being 3.1% lower than anticipated [1]