Investment Rating - The report maintains a "Buy" rating for the company [3][4]. Core Insights - The company has shown significant growth, with Miu Miu's revenue increasing by 105% year-on-year in FY24Q3, while Prada's revenue grew by 2% [1]. - Retail revenue by region indicates a 12% increase in the Asia-Pacific region, an 18% increase in Europe, and a 10% increase in the Americas [1]. - The report highlights the successful initiatives of Miu Miu, including special projects and collaborations that have enhanced brand visibility and cultural discussions [1]. - The earnings forecast has been revised upwards, with projected revenues for 2024-2026 expected to be €5.5 billion, €6.3 billion, and €7.3 billion respectively, compared to previous estimates of €5.11 billion, €5.53 billion, and €6.0 billion [1]. - Net profits are projected to be €820 million, €950 million, and €1.09 billion for the same period, up from previous estimates of €750 million, €850 million, and €930 million [1]. - Earnings per share (EPS) are expected to be €0.32, €0.37, and €0.42, revised from €0.29, €0.33, and €0.36 [1]. - The price-to-earnings (PE) ratios are projected to be 21, 18, and 16 times for the respective years [1]. Financial Data Summary - The total share capital of the company is 2,558.82 million shares [4]. - The total market capitalization is approximately 148.92 billion HKD [4]. - The net asset value per share is 12.86 HKD [4]. - The debt-to-asset ratio stands at 49.13% [4]. - The stock has traded between a high of 66.80 HKD and a low of 40.00 HKD over the past year [4].

Revenue Growth - Prada Group reported a net revenue of €3,829 million for the nine months ended September 30, 2024, representing an 18% increase at constant exchange rates compared to the same period in 2023[1]. - Retail sales net revenue increased by 18.3% year-over-year, accounting for 89.4% of total net revenue, consistent with the previous year's level[4]. - Miu Miu's retail sales net revenue surged by 97.3% year-over-year, with a strong performance of 105.4% in the third quarter[5]. - Wholesale sales net revenue increased by 8.6% year-over-year, driven by the duty-free channel and independent wholesale development[4]. - Licensing revenue grew by 23.7% year-over-year, primarily due to contributions from eyewear and fragrances[4]. Regional Performance - The Asia-Pacific region recorded a retail sales net revenue growth of 12.0%, maintaining a consistent trend in the third quarter despite challenging market conditions[6]. - Japan experienced significant retail sales net revenue growth of 52.6%, supported by robust local consumption and strong tourist traffic[7]. - Retail sales net revenue in Europe increased by 18.1%, supported by local customer and tourist spending[7]. - The Middle East recorded a solid retail sales net revenue growth of 24.1%, with acceleration in the third quarter[7]. Store Operations - The company opened 21 new stores and closed 26, resulting in a total of 601 operational stores as of September 30, 2024[4].

Core Viewpoint - The fashion industry is grappling with the challenge of balancing spectacle with genuine sustainability efforts, as exemplified by Diesel's recent show and Prada's innovative collaboration with Axiom Space [1][2][3]. Group 1: Spectacle vs. Sustainability - Fashion shows often prioritize performative displays over substantive changes needed to address environmental issues, focusing on surface-level ideas while neglecting systemic problems like fast fashion and poor working conditions [3][4]. - The carbon footprint of international fashion events is significant, driven by travel and consumption promotion, which contradicts sustainability goals [4]. - The pandemic prompted a shift to digital fashion shows, but the industry has largely reverted to live events, sidelining virtual presentations [4]. Group 2: Innovations in Sustainable Fashion - The collaboration between Prada and Axiom Space highlights the potential for fashion to intersect with high-tech industries, using advanced materials designed for extreme conditions [5][7]. - Prada's efforts in sustainability include using recycled textiles and improving transparency, although it faces criticism for not meeting all sustainability goals [6]. - Innovations in materials, such as cooling textiles, are emerging to address climate change challenges, with the potential for everyday applications [7][8]. Group 3: Future Directions - The partnership between Prada and Axiom Space serves as a model for how brands can leverage high-profile projects to enhance their sustainability credentials while maintaining a fashionable image [8]. - The challenge remains to drive demand for sustainable innovations by making them appealing and fashionable to consumers [8].

Core Insights - The research service "Asia Value & Moat Stocks" targets value investors looking for Asia-listed stocks with significant discrepancies between market price and intrinsic value, focusing on deep value balance sheet bargains and wide moat stocks [1] Group 1: Investment Focus - The service emphasizes deep value balance sheet bargains, which include net cash stocks, net-nets, low price-to-book (P/B) stocks, and sum-of-the-parts discounts [1] - It also highlights wide moat stocks, which are characterized by strong earnings power at discounted prices, including high-quality businesses and hidden champions [1] Group 2: Market Emphasis - The primary focus is on investment opportunities in the Hong Kong market, providing a range of watch lists with monthly updates for investors [1]

Financial Performance - Prada Group reported a revenue increase of 15% for the first half of 2024, reaching €1.5 billion compared to €1.3 billion in the same period last year[11]. - The company’s net profit for the first half of 2024 was €300 million, reflecting a 20% increase from €250 million in the previous year[11]. - Prada Group expects a revenue growth of 12% for the full year 2024, projecting total revenues to reach approximately €3.2 billion[11]. - The company's net revenue for the six months ended June 30, 2024, was €2,548,634, representing a 14.2% increase from €2,232,379 in the same period of 2023[13]. - The net income attributable to the group increased to €383,499, reflecting a 25.7% growth compared to €305,168 in the prior year[15]. - Total net revenue for the six months ended June 30, 2024, was €2,548.6 million, a 14.2% increase compared to €2,232.4 million for the same period in 2023[24]. - The company reported a significant reduction in net financial expenses, decreasing by 77.1% to €4,410 from €19,292[12]. - The company reported a free cash flow of €396.1 million for the first half of 2024, a substantial increase from €32.8 million in the same period last year[36]. - The company’s net revenue reached €1,924.9 million, representing a 75.5% share of total revenue, while Miu Miu's net revenue was €595.4 million, accounting for 23.4%[24]. Sales and Market Expansion - User data indicated a 10% growth in active customers, with a total of 2 million new customers acquired during the period[11]. - Retail sales for the Prada brand grew by 5.5%, while Miu Miu's retail sales surged by 92.7% during the same period[15]. - The company plans to expand its market presence in Asia, targeting a 25% increase in retail locations by the end of 2025[11]. - The Asia-Pacific region contributed €774,435 thousand to retail sales net amount, representing 34.2% of total sales[108]. - Retail sales net revenue in Japan increased by 55%, making it the best-performing region for the first half of the year[26]. - The Americas recorded a retail sales net revenue increase of 7%, showing slight improvement in the second quarter[26]. Operational Efficiency and Investments - The company is investing €100 million in new product development and technology enhancements to improve customer experience and operational efficiency[11]. - The company’s operating cash flow for the first half of 2024 was €580,484, significantly higher than €181,753 in the first half of 2023[13]. - The total operating expenses amounted to €1,458,842, which is a 12.0% increase from €1,301,976 in the previous year[12]. - The company invested €168.7 million in capital expenditures during the period, focusing on store remodeling and technology enhancements[32]. - The company continues to strengthen its climate strategy by gradually switching to lower-impact raw materials and focusing on sustainability goals[20]. Sustainability Initiatives - Prada Group has launched a new sustainable product line, aiming for 30% of total sales to come from sustainable products by 2025[11]. - The company is committed to sustainable development, focusing on greenhouse gas reduction and the use of low-impact materials in products and packaging[49]. - The company has established a clear roadmap for its sustainability strategy, emphasizing the importance of traceability of raw materials and continuous improvement of social and environmental standards along the supply chain[49]. - The SEA BEYOND educational initiative engaged nearly 35,000 students from 56 countries, highlighting the company's commitment to cultural and marine conservation[20]. Financial Position and Liquidity - The balance sheet remains strong with net cash of €265 million as of June 30, 2024[15]. - The company’s cash and cash equivalents stood at €661.3 million as of June 30, 2024, slightly down from €689.5 million at the end of 2023[34]. - The net financial position as of June 30, 2024, was positive at €265.4 million[30]. - The total undrawn credit facilities amounted to €1,252 million as of June 30, 2024, an increase from €768 million as of December 31, 2023[37]. - The company believes that the current available funds and credit lines, along with cash generated from operations and financing activities, are sufficient to meet its working capital, investment activities, loan repayments, and planned dividend payments[53]. Corporate Governance - The company is committed to maintaining the highest standards of corporate governance to create long-term sustainable value for stakeholders[66]. - The board of directors consists of 11 members, including 6 executive directors and 5 independent non-executive directors[68]. - The audit and risk committee held three meetings during the review period with an attendance rate of 77.78%[70]. - The company has established a Supervisory Body to ensure compliance with the Italian Legislative Decree No. 231/2001, with a three-year term for its members[76]. - The company will continue to review and assess its governance practices to ensure compliance with the latest developments[67]. Risk Management - The company faces liquidity risk, which is managed by the board and the finance director, ensuring that financial resources are optimized[53]. - Credit risk is primarily associated with trade receivables from wholesale channels and other business partners, managed through monitoring customer creditworthiness and using insurance contracts[50]. - The company has identified and is addressing various operational risks, including geopolitical tensions, network attacks, and extreme weather events, to mitigate potential economic and reputational losses[49]. - Foreign exchange risk is hedged through derivative contracts to stabilize the value of future cash flows in euros or other functional currencies[53]. - Interest rate risk is managed by using derivatives to convert floating-rate debt into fixed-rate debt or debt with interest rates within a specific range[53]. Financial Reporting and Compliance - The company’s financial reporting adheres to International Financial Reporting Standards, ensuring compliance and transparency in financial disclosures[103]. - The company has implemented a tax risk management system to monitor and mitigate potential tax compliance risks[55]. - The company discussed the establishment of a Diversity, Equity, and Inclusion Executive Committee during the Sustainability Committee meetings[73]. - The company has ongoing discussions with the Italian tax authorities regarding tax disputes, with potential tax liabilities for 2016 and 2017 estimated at approximately €10.8 million and €9.8 million respectively[184].

Investment Rating - The investment rating for the company has been upgraded to "Buy" with a target price set above the current price of 57.65 HKD [7][5]. Core Insights - Miu Miu has shown strong growth with a retail sales increase of 92.7% year-on-year, supported by successful fashion shows and impactful marketing campaigns [2]. - Prada has achieved high-quality development with a retail sales growth of 5.5%, benefiting from a balanced product mix and strong performance in challenging markets [3]. - The company has accelerated its retail upgrades and strengthened its supply chain, completing 36 renovation projects and expanding its digital capabilities [4]. Financial Performance - For the first half of 2024, the company reported revenues of 2.55 billion euros, a year-on-year increase of 17.4%, and a net profit of 380 million euros, up 25.7% [1]. - Retail sales net revenue increased by 18.2%, while wholesale sales grew by 7.8%, driven by the duty-free channel [1]. - The company expects full-year revenues for 2024-2026 to be 5.11 billion euros, 5.53 billion euros, and 6.00 billion euros respectively, with net profits projected at 750 million euros, 850 million euros, and 930 million euros [5]. Regional Performance - Retail sales in Japan, the Middle East, Europe, Asia Pacific, and the Americas grew by 55%, 20%, 18%, 12%, and 7% respectively [1]. - Japan has emerged as the best-performing region, benefiting from robust demand and strong tourist flows [1]. Strategic Developments - The company has committed to enhancing customer experience through digital upgrades and supply chain improvements, with capital expenditures of 0.15 million euros and 0.32 million euros for industrial and IT projects respectively [4]. - The expansion of a key knitwear production facility is expected to create 214 new jobs [4].

Investment Rating - The investment rating for Prada is upgraded to "Buy" with a target price reflecting an expected return of over 20% within the next six months [6]. Core Insights - Prada reported a revenue of €2.55 billion for the first half of 2024, representing a year-on-year increase of 17.4%, with net profit rising by 25.7% to €380 million [1]. - Miu Miu's retail sales surged by 92.7% year-on-year, showcasing strong growth across all regions and product categories [2]. - The company is focusing on digital development and supply chain enhancements, with capital expenditures of €0.15 million and €0.32 million for industrial and IT projects, respectively [4]. - The revenue forecasts for 2024-2026 have been raised, with expected revenues of €5.11 billion, €5.53 billion, and €6.00 billion, and net profits of €750 million, €850 million, and €930 million for the respective years [5]. Summary by Sections Financial Performance - In the first half of 2024, Prada's retail sales increased by 5.5%, driven by full-price sales and volume growth, with all product categories and menswear achieving growth [3]. - Retail sales net revenue grew by 18.2% in the retail channel and 7.8% in the wholesale channel, supported by duty-free stores [1]. Regional Performance - Retail sales in Japan, the Middle East, Europe, Asia Pacific, and the Americas grew by 55%, 20%, 18%, 12%, and 7% respectively [1]. - Japan emerged as the best-performing region, benefiting from robust demand and strong tourist flows [1]. Brand Development - Miu Miu's brand strength continues to rise, supported by successful fashion shows and impactful marketing campaigns [2]. - Prada maintains a balanced product mix, with new and classic items supporting leather goods, while creative initiatives drive the growth of ready-to-wear and footwear [3]. Retail and Supply Chain Enhancements - The company completed 36 renovation and reset projects in the first half of 2024, demonstrating its commitment to enhancing customer experience [4]. - As of June 30, 2024, Prada operated 593 directly managed stores after opening 9 and closing 22 [4].

Financial Data and Key Metrics - Net revenues reached €2.55 billion, up 17% YoY at constant FX, with a negative FX impact of 330 basis points leading to a 14% increase at current exchange rates [43] - Retail sales grew 18% YoY to €2.26 billion at constant FX, with EBIT reaching €575 million, a 26% increase YoY, and EBIT margin expanding to 22.6% [43][3] - Net income increased by 26% YoY to €383 million, while CapEx for H1 2024 was €169 million, allocated to retail, IT, and industrial infrastructure [3] - Operating costs increased by 14% at constant FX, driven by client-facing initiatives and digital/IT investments, with G&A costs rising from 6.6% to 7% of revenue [2] Business Line Performance - Retail sales grew 18% YoY, driven by full-price like-for-like volumes, with wholesale up 8% and royalties increasing 28% [36] - Prada retail sales grew 6% YoY, with a 5% increase in Q2 despite tougher comparisons in Asia Pacific [110] - Miu Miu retail sales surged 93% YoY, contributing 23% of group retail sales, up from 14% in H1 2023 [87] - Church's also performed well, with a 15% increase in retail sales [87] Regional Performance - Asia Pacific retail sales grew 12% in H1, with Q2 up 8% despite tougher comparisons [1] - Europe saw an 18% increase in retail sales, with Q2 growth of 19% driven by strong local demand and tourism [1] - Americas retail sales grew 7%, with Q2 showing a sequential improvement of 9% [1] - Japan was the best-performing region, with retail sales up 55% in H1 and accelerating to 65% in Q2 [1] - Middle East retail sales grew 20% in H1, with acceleration in Q2 [1] Strategy and Industry Competition - The company reiterated its commitment to delivering sustainable, above-market growth, focusing on brand investment and agility in a challenging market environment [5] - Prada and Miu Miu are positioned to capture unique identities, with strong traction in ready-to-wear, footwear, and leather goods [85][87] - The company is investing in vertical integration and manufacturing capabilities, with €50 million allocated to industrial initiatives in H1 2024 [3] Management Commentary on Market Conditions - Management noted a more complicated environment in China, with easier trends in other regions, and emphasized vigilance and agility in navigating market challenges [7][15] - The company expects operating leverage to improve in H2, with moderated OpEx growth and continued focus on cost control [22][100] Other Key Information - The group maintained a solid balance sheet with a net cash position of €265 million as of June 2024 [37] - ESG initiatives progressed, with 80% of raw material suppliers engaged in sustainability programs and 70% of leather procurement covered by traceability systems [86] Q&A Summary Question: Demand in China and offsetting with Chinese spending abroad - Management noted no drastic changes in trends in July, with China becoming more complicated while other regions eased [7] Question: Miu Miu's operating margin compared to Prada - Miu Miu's profitability is improving significantly due to productivity gains, but reinvestment is needed to sustain growth [58] Question: Retail footprint and store openings - The company closed 10 Prada stores and 4 franchise stores in H1, with plans for marginal growth in store openings in 2025 [18][44] Question: Pricing strategy - Price increases in H1 were in the low single digits, with mid-single-digit increases expected for the full year [20] Question: OpEx leverage and EBIT margin expansion - Management expects more visible operating leverage in H2, with moderated OpEx growth and improved revenue growth [22] Question: Regional performance in Europe and Japan - Europe saw low double-digit growth in Q2, while Japan maintained strong performance with 65% local and 35% tourist sales [72] Question: Gross margin outlook for H2 - No major changes in industrial gross margins are expected, despite some FX headwinds [29] Question: Online business penetration - Online penetration is around 8-9%, with higher rates in the US, but the focus is on full potential rather than specific penetration levels [70] Question: Category performance and jewelry launches - Ready-to-wear and footwear showed strong traction, with leather goods also performing well [123] Question: Synergies between Prada and Miu Miu - The two brands are increasingly independent, with 80% of operations now separate, but Prada supports most of the shared infrastructure costs [127]

Revenue and Sales Performance - Prada Group recorded net revenue of 2,549 million euros, a 17% increase compared to the same period in 2023 at constant exchange rates[2] - Retail sales net revenue increased by 18% at constant exchange rates compared to the same period in 2023[2] - Prada brand and Miu Miu retail sales net revenue increased by 6% and 93% respectively at constant exchange rates[2] - Double-digit growth was recorded in the following regions at constant exchange rates: Japan +55%, Middle East +20%, Europe +18%, and Asia Pacific +12%[2] - Prada Group's net revenue increased by 17.4% at constant exchange rates compared to the first half of 2023, driven by full-price and like-for-like sales[9] - Prada's retail sales grew by 5.5%, while Miu Miu's retail sales surged by 92.7% during the period, with strong performance across all categories and regions[9] - Net sales increased by 13.9% to €2,487.8 million, with a gross margin of 79.8%[12] - Total net revenue increased by 14.2% to €2,548.6 million, with retail sales (directly operated stores and e-commerce) contributing 88.8% of the total revenue, growing by 14.6% to €2,262.6 million[17] - Miu Miu's retail sales surged by 85.9% to €530.1 million, significantly outperforming other brands and contributing 23.4% of total retail sales[17] - Japan's retail sales grew by 38.0% to €308.6 million, representing 13.6% of total retail sales, with a fixed exchange rate growth of 55.0%[17] - Retail sales in Europe grew by 17.2% to €682.2 million, contributing 30.2% of total retail sales, with a fixed exchange rate growth of 18.3%[17] - The Asia-Pacific region accounted for 34.2% of retail sales, with net sales increasing by 8.2% to €774.4 million, and a fixed exchange rate growth of 12.0%[17] - Prada Group's net revenue for the first six months of 2024 reached 2,548.6 million euros, a 17.4% increase year-over-year, with retail sales contributing 88.8% of total net revenue[41] - Miu Miu's retail sales surged by 92.7% year-over-year, driven by strong growth across all regions and product categories[42] - Japan was the top-performing region with a 55% increase in retail sales, supported by strong local demand and tourism[42] - Prada's retail sales grew by 5.5% year-over-year, with growth across all product categories and regions, including China and other Asia-Pacific countries[42] Profitability and Financial Performance - EBIT was 575 million euros, representing 22.6% of net revenue, a 17% increase compared to the same period in 2023[2] - Net income for the group was 383 million euros, a 26% increase compared to the same period in 2023[2] - The Group's EBIT margin improved to 22.6%, with a net cash position of €265 million at the end of the period[9] - Net income attributable to the Group rose by 25.7% to €383.5 million, with a net income margin of 15.0%[12] - The Group's operating income (EBIT) for the period was 575.1 million euros, representing 22.6% of net revenue, up from 491.4 million euros (22% of net revenue) in the same period last year[43] - Net income for the first six months of 2024 was 385.7 million euros, accounting for 15.1% of net revenue, compared to 306.6 million euros (13.7% of net revenue) in the previous year[45] - The Group's gross margin stood at 79.8% of net revenue, slightly down from 80.3% in the same period last year, but stable when excluding currency effects[43] Cash Flow and Financial Position - As of June 30, 2024, the net financial position was positive at 265 million euros[2] - Operating cash flow net of lease liabilities was 580.5 million euros, compared to 181.8 million euros in the same period in 2023[7] - Net invested capital, including right-of-use assets, was 5,825.3 million euros as of June 30, 2024[8] - Cash and cash equivalents decreased from €689.5 million to €661.3 million, a decline of 4.1%[13] - Trade receivables (net) decreased from €405.2 million to €378.7 million, a decline of 6.5%[13] - Inventory (net) increased from €783.0 million to €864.4 million, a growth of 10.4%[13] - Total current assets increased slightly from €2,162.7 million to €2,175.4 million, a growth of 0.6%[13] - Property, plant, and equipment increased from €2,032.9 million to €2,076.9 million, a growth of 2.2%[13] - Total non-current assets increased from €5,452.3 million to €5,565.1 million, a growth of 2.1%[13] - Total liabilities increased from €3,738.2 million to €3,803.2 million, a growth of 1.7%[13] - Net income attributable to equity holders of the company decreased from €671.0 million to €383.5 million, a decline of 42.8%[13] - Total equity increased from €3,876.8 million to €3,937.2 million, a growth of 1.6%[13] - Other reserves increased from €2,833.9 million to €3,162.4 million, a growth of 11.6%[13] - Operating cash flow increased by 20.9% to €871.1 million, driven by higher pre-tax income of €537.0 million, up 20.7% from the previous year[15] - Net cash flow from operating activities rose to €799.3 million, a significant increase from €393.5 million in the same period last year[15] - Capital expenditures for property, plant, and equipment, as well as intangible assets, increased by 22.6% to €182.9 million[15] - The company paid dividends of €331.1 million to Prada S.p.A. shareholders, up 24.1% from the previous year[15] - Total comprehensive income for the period reached €408.1 million, with the group's share at €405.6 million, up 36.0% year-over-year[16] - Net trade receivables decreased to €378.7 million as of June 30, 2024, from €405.2 million as of December 31, 2023[21] - Inventory increased to €864.4 million as of June 30, 2024, up from €783.0 million as of December 31, 2023, primarily due to supporting sales growth[23] - Provisions for obsolete and slow-moving inventory increased by €17.2 million in the first half of 2024, allocated to slow-moving products and raw materials[23] - Other current assets totaled €253.7 million as of June 30, 2024, compared to €267.4 million as of December 31, 2023[26] - Capital expenditures for property, plant, and equipment totaled €137.0 million, with significant additions in leasehold improvements (€46.9 million) and furniture and fixtures (€15.4 million) due to retail property remodeling and store resets[27] - Intangible assets increased by €31.7 million, primarily driven by software additions (€5.6 million) and in-progress assets (€25.6 million) related to retail and industrial projects[28] - Goodwill remained stable at €515.5 million, allocated to cash-generating units: Prada (€424.3 million) and Miu Miu (€91.2 million), with no impairment indicators reported[29][30] - Right-of-use assets increased by €47.3 million, mainly due to new leases and remeasurements totaling €265.4 million, offset by depreciation of €220.4 million[31] - Trade payables increased to €463.3 million, with 91.0% of payables (€421.6 million) not overdue as of June 30, 2024[35][36] - Other current liabilities decreased to €273.1 million, driven by a reduction in capital expenditure payables (€76.4 million) and other payables (€163.8 million)[38] - Net invested capital increased to 5,825 million euros as of June 30, 2024, compared to 5,791 million euros at the end of 2023[46] - Right-of-use assets increased by 47.3 million euros, primarily due to new leases and remeasurement of existing leases totaling 265.4 million euros[47] - Operating working capital increased by 45.1 million euros to 779.9 million euros as of June 30, 2024, driven by an 81.4 million euro increase in inventory[49] - Net financial position improved to 265.4 million euros as of June 30, 2024, compared to 196.9 million euros at the end of 2023[46] - Lease liabilities increased to 2,153 million euros as of June 30, 2024, up from 2,111 million euros at the end of 2023, mainly due to lease contract extensions and modifications[53] - Capital expenditures for the period amounted to 168.7 million euros, with depreciation, amortization, and impairments totaling 136.8 million euros[47] - Free cash flow for the six-month period was 396.1 million euros, a significant increase from 32.8 million euros in the same period of 2023[51] - The company secured a new 800 million euro sustainability-linked revolving credit facility in April 2024, replacing the previous 400 million euro facility[51] - Total available credit lines increased to 1,252 million euros as of June 30, 2024, up from 768 million euros at the end of 2023[52] - Net financial debt, including lease liabilities, decreased to 1,888 million euros as of June 30, 2024, from 1,914 million euros at the end of 2023[54] Store Operations and Expansion - The group operates 593 directly operated stores globally as of June 30, 2024[3] - The Group completed 36 store renovations and relocations, opened 9 new stores, and closed 22 stores, resulting in a total of 593 directly operated stores[10] - Total number of stores decreased to 593 directly operated stores and 24 franchised stores as of June 30, 2024, compared to 606 directly operated stores and 25 franchised stores as of December 31, 2023[18] - The Group operated 593 stores as of June 30, 2024, after opening 9 new stores and closing 22 during the period[41] Brand Performance and Initiatives - Prada's creative initiatives and collaborations, such as the reinterpretation of the Galleria bag and the Re-Nylon collection, contributed to its strong performance[10] - Miu Miu's success was driven by acclaimed fashion shows, impactful campaigns like the new leather goods campaign, and special projects like Miu Miu Upcycled[10] Sustainability and ESG - The Group strengthened its climate strategy, focusing on lower-impact materials, reducing Scope 3 emissions, and enhancing supply chain governance[10] - The Sustainability Committee held two meetings in 2024 with 100% attendance to report on ESG progress and approve the 2023 Sustainability Report[64] - The company established a new Diversity, Equity, and Inclusion (DEI) Executive Committee and governance structure in the USA[65] Corporate Governance - The Board of Directors consists of 11 members, including 6 executive directors and 5 independent non-executive directors[58] - The Audit and Risk Committee held three meetings during the review period with an attendance rate of 77.78%[60] - The Remuneration Committee reviewed and recommended the total base remuneration for the Board with a 100% attendance rate[61] - The Nomination Committee held two meetings with a 66.67% attendance rate to verify the independence of independent non-executive directors and recommend board structure[63] - The company adheres to the highest standards of corporate governance to create long-term sustainable value for stakeholders[56] - The company's corporate governance model complies with Italian laws and Hong Kong Stock Exchange Listing Rules[56] - The Board reviewed and confirmed that corporate governance practices complied with the Code, except for one minor exception[57] - The Board of Directors appointed new members to the Sustainability Committee for a three-year term ending in 2026[64] - The Statutory Auditors Committee held four meetings during the review period and appointed new members for a three-year term ending in 2026[66] - The "Organismo di Vigilanza" (Supervisory Body) was appointed for a three-year term ending in 2026 to ensure compliance with Italian regulations[67] - No dividends were declared or paid during the review period, except for the final dividend for 2023[69] - The company confirmed no violations of securities trading rules by directors or employees during the review period[70] - No repurchase, sale, or redemption of the company's listed securities occurred during the review period[71] - The interim financial results were published on the Hong Kong Stock Exchange and the company's website[71] Dividends and Shareholder Returns - The company proposed a final dividend of €0.137 per share for 2023, totaling €350,558,888, which was approved and paid in May 2024[69] - Dividends paid during the six months ended June 30, 2024, amounted to €350.6 million, with a per-share dividend of €0.137[20] Risk and Provisions - The Group's total risk and expense provisions at the end of June 2024 were 55.4 million euros, with other risk provisions accounting for 54.4 million euros, primarily related to lease restoration obligations[39][40] - Tax disputes with the Italian tax authority involve potential adjustments of 10.8 million euros for 2016 and 9.8 million euros for 2017, plus interest[40] Management and Strategic Focus - Management is satisfied with the company's performance in the first half of the year despite increasing industry and geopolitical complexities[55] - The company's primary focus in the coming months is to enhance brand appeal, drive customer engagement, and accelerate retail excellence[55] - The company remains committed to achieving robust, sustainable, and above-market growth[55]

Core Viewpoint - Prada has experienced a significant price increase of 35% since November, with total returns reaching 37%, contrasting with previous concerns about slowing sales growth and luxury sector challenges [1][2]. Group 1: Financial Performance - The net revenue growth for the first nine months of 2023 was 12.4% YoY, but it slowed to 3.4% in Q3 2023 due to weakness in key markets, particularly the US [4]. - Full year 2023 sales grew by 13% at current exchange rates and 17% at constant exchange rates, with Q4 2023 showing an 18.1% growth [5]. - In Q1 2024, net revenues increased to €1,187 million, reflecting an 11% rise reported and a 16% increase at constant exchange rates [6]. Group 2: Competitive Positioning - Prada's growth outpaces most peers, with only Hermès showing similar double-digit growth of 13% YoY in Q1 2024 [7]. - In contrast, LVMH reported a revenue contraction of 2% in Q1 2024, while Richemont and Kering experienced declines of 1% and 11% respectively [8]. Group 3: Profitability - Prada's net profit grew by 44.2% in 2023, surpassing earlier expectations of 23%, with net margin increasing to 14.2% from 11.1% [10]. - Cost of goods sold and operating expenses grew at slower rates than revenues, contributing to improved profitability [11]. Group 4: Market Valuation - If revenue growth is sustained, projected net income for 2024 could reach €748 million (USD 808 million), resulting in a forward P/E ratio of 24.4x, slightly lower than previous levels [12]. - Prada's long-term forward P/E averages 32.1x over the past decade, indicating a potential 30% upside [14]. Group 5: Long-term Outlook - Prada has demonstrated resilience in the luxury market slowdown, with a five-year CAGR of 8.6% for revenues and 26.7% for net income, suggesting strong long-term potential [16].