Core Viewpoint - The report from CICC maintains a "buy" rating for Prada (01913) but lowers 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: Target Price and Valuation - The target price corresponds to a 2025 P/E ratio of 22.6 times and a 2026 P/E ratio of 18.9 times [1] - The current stock price reflects a 2025 P/E ratio of 13.8 times and a 2026 P/E ratio of 11.2 times, indicating a potential upside of 60.3% from the target price [1] Group 2: 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 due to 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 [2] - Net income stood at EUR 386 million, with a net margin of 14.1%, remaining stable year-on-year [2] - As of June 30, 2025, the group held net cash of EUR 352 million [2] Group 3: Growth Drivers - Despite uncertainties related to the Versace acquisition, Prada Group is expected to be one of the best-performing luxury companies in 2025, driven by: 1) Expansion of retail space for Prada and Miu Miu brands, expected to accelerate in 2H25 [1] 2) Increased production of leather goods for the Miu Miu brand [1] 3) Consistency in creativity while many peers undergo design transformations in 2025 [1]

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 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]