[Table_Title] 研究报告 Research Report 27 Oct 2025 开云集团 Kering (KER FP) 3Q25 核心品牌与主要市场环比改善，结构优化推动修复拐点显现 Core Brands and Key Markets Show Sequential Recovery in 3Q25, Structural Optimization Drives an Inflection Point 寇媛媛 Yuanyuan Kou 陈芳园 Ashley Chen yy.kou@htisec.com ashley.fy.chen@htisec.com [Table_yemei1] 热点速评 Flash Analysis [Table_summary] (Please see APPENDIX 1 for English summary) 事件：10 月 22 日，开云集团发布 3Q2025 业绩。集团收入同比下降 10%；可比门店增速-5%，汇率带来约 5 个百分 点负面影响。各主要品牌与地区均实现环比改善，北美与西欧表现最佳。 [Table_yejiao1] 本研究报告由海通国际分销， ...

Core Viewpoint - Concerns about cash devaluation are prevalent, but the fastest depreciating assets in the next five years may not be cash, but rather real estate, automobiles, luxury goods, and university degrees [1][3]. Group 1: Real Estate - Since 2022, the Chinese real estate market has entered a deep adjustment period, with average national housing prices down approximately 30% from historical highs, and some third and fourth-tier cities experiencing declines exceeding 60% [8]. - Future housing price trends will show divergence, with second and third-tier cities likely to see a slowdown in declines, while first-tier cities like Shanghai and Shenzhen may face further downward pressure to align prices with local income levels [9]. Group 2: Automobiles - By 2025, the automotive market is expected to see intensified price wars, with domestic mid-range cars dropping by 20,000 to 30,000 yuan and imported luxury brands decreasing by nearly 100,000 yuan [11]. - The second-hand car market is also affected, with significant depreciation observed; for instance, a car purchased for 260,000 yuan last year may only be worth 160,000 yuan now, indicating a 100,000 yuan drop in value [11]. Group 3: Luxury Goods - The global luxury goods consumer base has shrunk by 50 million over the past two years, with 65.9% of consumers actively reducing luxury purchases due to perceived low value for money [12]. - Economic downturns have led to a shift in consumer attitudes, with many middle-class individuals prioritizing practicality and cost-effectiveness over brand prestige, prompting brands like Gucci and Burberry to implement significant price reductions [12]. Group 4: University Degrees - The value of university degrees has rapidly depreciated due to the proliferation of higher education, with over 10 million graduates entering the job market annually, diminishing the degree's status as a key to high-income employment [12].

Core Insights - Morgan Stanley's report indicates that Prada's sales in Q3 this year grew by 8.5% at constant exchange rates, slightly above market consensus [1] - Retail sales met market expectations with a year-on-year growth of 7.6%, driven primarily by the volatile wholesale channel [1] - Prada remains one of the fastest-growing groups this fiscal quarter, with growth rates nearly comparable to Hermès, significantly outpacing French luxury giants LVMH and Kering [1] - However, market reaction is expected to be relatively muted, as Prada's revenue barely meets market expectations, unlike most peers [1] Financial Projections - Morgan Stanley has revised its revenue growth forecast for the group in 2025 down to 6.6% from an original estimate of 8.5% [1] - The EBIT margin is expected to remain at 23.4% [1] - Earnings per share forecasts for the fiscal years 2025 to 2026 have been reduced by 0.6% [1] - The target price is maintained at HKD 53 [1]

Core Viewpoint - UBS reports that Prada's third-quarter sales exceeded expectations, with total sales of €1.33 billion and an organic sales growth (OSG) of 9%, both surpassing market consensus [1] Group 1: Sales Performance - Prada's total sales for the third quarter reached €1.33 billion [1] - The organic sales growth (OSG) for the same period was 9%, indicating strong performance [1] Group 2: Market Position and Outlook - Despite the strong third-quarter sales, the growth momentum in retail for Prada is considered moderate compared to peers that have reported results [1] - UBS does not expect this performance to significantly boost investor sentiment in the short term [1] Group 3: Investment Rating - UBS maintains a 12-month target price for Prada at HK$74 and rates the stock as "Buy" [1]

Core Viewpoint - Prada's retail sales for Q3 2025 met market expectations, showing a year-on-year growth of 7.6% at constant exchange rates, with the Prada and Miu Miu brands performing in line with expectations [1] Sales Performance - Prada's retail sales decreased by 0.8% year-on-year, while Miu Miu's sales increased by 29% year-on-year [1] - Over a two-year period, both brands demonstrated stable quarterly performance, with Prada's core brand showing a year-on-year growth of 1% in both Q2 and Q3 of this year, and Miu Miu showing significant growth of 136% and 134% respectively [1] Market Insights - The Chinese market for Prada's core brand is still experiencing negative growth, but there has been a quarter-on-quarter improvement in Q3 [1] - Positive growth was observed in the Americas, Europe, and Japan, driven by strong local demand and slightly improved tourism demand [1] - Management believes that the worst period in China has passed, and sales have continued to improve since October [1] Future Outlook - The management cautioned that the fourth quarter will be challenging due to tough comparisons, and the last six weeks of the year will be crucial for performance [1]

Core Viewpoint - The acquisition of a minority stake in Maybach Luxury Goods Asia Pacific (MAP) by Lao Feng Xiang for $24 million raises questions about the necessity and rationale behind such a high premium valuation, especially since MAP has not yet commenced operations and was only established in February of this year [1][2][5]. Group 1: Acquisition Details - Lao Feng Xiang plans to invest $24 million to acquire 20% of MAP through its subsidiary, Lao Feng Xiang Hong Kong Limited, with the goal of expanding into the luxury market [2]. - The Shanghai Stock Exchange has raised concerns regarding the high premium valuation of MAP, which is reported to have an extraordinary valuation increase of 9,692,207.69% [1][5]. - MAP aims to open 75 stores within six years, leveraging the brand's existing global presence in 75 countries and a compound annual growth rate of 36.5% over the past four years [3][6]. Group 2: Market and Operational Risks - Lao Feng Xiang acknowledges potential risks associated with buyout-style procurement, including unsold inventory and the stability of brand licensing [3][4]. - Cultural differences, market competition, and changing consumer demands are identified as factors that could negatively impact future operations [3][4]. - The investment agreement does not include installment payment terms, which Lao Feng Xiang claims is to mitigate risks associated with transaction completion [4]. Group 3: Valuation Methodology - The valuation report indicates that MAP's equity value is estimated at $126 million using the income approach, with a significant valuation premium compared to its book value of $1,300 [5][6]. - Lao Feng Xiang defends the use of the income approach for valuation, citing the brand's established market presence and the structured distribution model that mitigates retail risks [6][7]. - Experts highlight that the high valuation may reflect the brand's luxury status and the potential growth in the Asia-Pacific luxury market, but caution against the risks of brand value collapse [8].

Investment Rating - The report maintains an "Outperform" rating for the luxury goods sector [7]. Core Insights - The luxury goods sector is showing signs of recovery, particularly in the Greater China region, with brands reporting varying degrees of improvement in Q3 2025 compared to Q2 [2][3]. - LVMH's Q3 2025 revenue grew by 1% year-on-year to €18.28 billion, with significant improvement in the Chinese market [3][18]. - Hermes reported a 9.6% year-on-year revenue increase in Q3 2025, with growth across all regions [4][24]. - Kering's revenue decline narrowed significantly to 5% year-on-year in Q3 2025, indicating a recovery trend [5][28]. Summary by Sections Luxury Goods Performance - LVMH's revenue in Q3 2025 showed a year-on-year increase of 1%, driven by fashion and leather goods, with notable recovery in the Chinese market [3][18]. - Hermes achieved a revenue of €3.9 billion in Q3 2025, with a 9.6% year-on-year growth, outperforming analyst expectations [4][24]. - Kering's Q3 2025 revenue was €3.42 billion, reflecting a 10% decline year-on-year, but an improvement from previous quarters [5][28]. Regional Performance - In Asia (excluding Japan), LVMH, Hermes, and Kering reported year-on-year revenue changes of +2%, +6%, and -16%, respectively, indicating a mixed recovery across brands [2][3]. - Hermes experienced strong growth in Japan, with a 13.8% increase, while the Americas saw a 14.1% growth [4][24]. Brand-Specific Insights - LVMH's organic revenue growth varied by region, with the U.S. and Asia (excluding Japan) showing improvements of +3% and +2%, respectively [3][18]. - Kering's brands, including Gucci and YSL, reported declines of -14% and -4%, respectively, in Q3 2025, but showed signs of recovery compared to previous quarters [5][28].

Core Insights - The article discusses the paradox of rising household savings in China alongside declining demand for loans and housing, creating significant pressure on banks [1][3][4] Group 1: Deposit Trends - Household deposits increased by 11.28 trillion yuan in the first ten months of the year, but there was a sharp decline of 570 billion yuan in October alone, indicating a puzzling outflow of funds [3][4] - Despite the drop in deposit rates to historical lows, the outflow of funds has not significantly boosted consumer spending or real estate transactions [3][4][6] Group 2: Consumer Market and Real Estate - The consumer market remains sluggish, with no explosive growth in demand for sectors like automobiles and luxury goods, suggesting that the outflow of deposits has not translated into increased consumer spending [4][6] - The real estate market continues to see falling prices with no clear signs of recovery, leading to a lack of investment from household savings into property [6][12] Group 3: Investment Shifts - Many savers are turning to higher-yield financial products, with bank wealth management products offering expected returns of 2.92% compared to a mere 1.65% for one-year fixed deposits, indicating a shift towards more rational investment strategies [9][12] - The A-share market has seen a significant rise, with indices climbing from 2,700 to 3,400 points, attracting substantial capital inflows from households seeking better returns [11][13] Group 4: Mortgage Prepayment Trends - A trend of early mortgage repayment is emerging, as borrowers seek to refinance at lower rates, contributing to the outflow of household deposits from banks [12]

Core Insights - The recent "clothing clash" between a LV coat priced at 16,000 yuan and a school uniform from Changjun High School highlights challenges faced by the LV brand in the Chinese market [2][3][8] - The LV coat is no longer available on the Chinese website and is sold out in most sizes on the overseas site, indicating a potential supply issue or declining demand [2][7] - The school uniform, referred to as "Panda uniform," is available for as low as 86 yuan, showing a stark contrast between luxury pricing and affordable options [2][7] Financial Performance - LVMH reported a 4% decline in total revenue to 39.81 billion euros for the first half of 2025, with a 15% drop in operating profit and a 22% decrease in net profit [8] - The fashion and leather goods segment, which includes LV, saw a 7% decline in organic revenue for the first half of the year, with a 9% drop in the second quarter [8] - The Asia region (excluding Japan) experienced a 9% decline in organic revenue for the first half of 2025, although there was a slight recovery with a 2% growth in the third quarter [8][9] Market Dynamics - The Chinese market, a significant area for LVMH, has shown a decline in consumer confidence, impacting luxury goods sales [9][10] - Cross-border shopping trends, influenced by factors like currency fluctuations, have diverted some consumer spending away from domestic markets [9] - LVMH is actively adjusting its strategies in China, including innovative marketing initiatives to stimulate consumer interest [10]

Company Update - Prada Group reported a 3Q25 revenue update with a year-on-year growth of +9% at constant exchange rates (CER), or +4% at reported exchange rates, reaching €1.33 billion, slightly above FactSet consensus estimate of €1.31 billion [1] - Retail revenue for 3Q25 showed a decline in Prada brand revenue (-1%) but improved compared to 2Q25 (-4%), while Miu Miu brand revenue grew by +29% despite a high year-on-year base (3Q24: +105%) [1] - In the Asia-Pacific region excluding Japan, revenue grew by +10%, with improved sales trends in mainland China, while the Americas saw a +20% growth, accelerating from +14% in 2Q25 [1] - For the first nine months of 2025, group revenue increased by +9%, driven by same-store full-price sales, with limited contribution from retail space expansion, impacted by approximately 260 basis points of foreign exchange headwinds [1] Comments - The company has ample room for revenue growth and margin expansion through category expansion, including jewelry and beauty products, which are still in early growth stages for both Prada and Miu Miu [1] - Continuous innovation in leather goods, particularly for Miu Miu, may lead to potential best-selling products [1] - Store network upgrades are focused on creating high-specification, high-efficiency flagship stores while streamlining long-tail stores [1] - Caution is advised regarding changes in the competitive landscape, as new designer products from brands like Dior, Chanel, Gucci, and Celine are set to launch in 1H26 [1] Profit Forecast and Valuation - Due to foreign exchange headwinds, revenue and EBIT forecasts for 2025 have been reduced by 6.1% and 6.9% to €5.731 billion and €1.359 billion, respectively [2] - The net profit forecast for 2025 has been lowered by 7.5% to €880 million, reflecting higher financial costs associated with additional loans from the Versace acquisition [1][2] - For 2026, revenue forecasts have been cut by 9.6% to €6.155 billion, with EBIT and net profit forecasts reduced by 13.2% and 14.1% to €1.492 billion and €976 million, respectively, due to increased competition and rising costs [2] - The valuation has shifted to be based on the 2026 net profit forecast, maintaining an outperform rating and a target price of HKD 75, corresponding to a 21.1x 2026 P/E ratio, with a 62.0% upside potential from the current stock price [2]