Investment Rating - The report maintains an investment rating of "A" for the textile and apparel industry [1] Core Insights - Adidas reported a 14% year-on-year revenue growth in its brand under constant currency for the first half of 2025, with total revenue reaching €12.105 billion, a 7% increase compared to the previous year [4][19] - The report highlights that all regional markets for Adidas achieved double-digit growth under constant currency [20] - The overall textile and apparel sector has shown a decline of 2.14% in the SW textile and apparel index, underperforming the broader market [22] Summary by Sections Company Performance - Adidas' FY2025H1 revenue increased by 7% to €12.105 billion, with a net profit growth of 121% to €798 million [4][19] - The company's gross margin improved by 0.9 percentage points to 51.9%, driven by lower product and transportation costs [5][19] - The report anticipates that for FY2025, Adidas will maintain its guidance of high single-digit revenue growth under constant currency, with operating profit expected to be between €1.7 billion and €1.8 billion [20] Market Dynamics - The textile and apparel sector's retail sales growth for the first half of 2025 was 3.1%, with sports and leisure goods showing a robust growth of 22.2% [11] - The report notes that the SW textile and apparel sector has lagged behind the broader market, with various sub-sectors experiencing declines [22] Regional Performance - In the European market, Adidas' revenue grew by 9% to €3.983 billion, while in North America, it increased by 6% to €2.523 billion [21] - The Greater China market saw an 8% revenue increase to €1.827 billion, and emerging markets experienced an 18% growth to €1.632 billion [21] Valuation Metrics - As of August 1, the PE-TTM for SW textile manufacturing was 20.94, while for SW apparel and home textiles, it was 27.69, indicating high valuation levels compared to historical averages [30]

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]

Core Viewpoint - Prada Group reported a 13% year-on-year increase in net revenue for Q1 of FY2025, reaching €1.341 billion, surpassing market expectations, while competitors like LVMH and Kering experienced declines [2] Group Performance - The Prada brand's revenue remained stable at €913 million, while Miu Miu saw a significant growth of 60%, contributing €416 million to the total revenue [4] - Church's recorded a mild growth of 1.8%, reaching €8.2 million [4] Regional Performance - Asia-Pacific achieved a 9.6% growth despite a challenging market environment [4] - Europe experienced a 14.3% increase driven by local consumer and tourist spending [4] - The Americas saw a 10% growth despite complex macroeconomic conditions [4] - Japan's market grew by 18%, although the growth rate is expected to slow down [4] - The Middle East was the standout market with a substantial 26% growth in retail sales [4] Strategic Initiatives - Prada continues to invest in the Chinese market, opening its first Asian dining space in Shanghai, designed by director Wong Kar-wai, offering a blend of Italian and Chinese cuisine [5][10] - Miu Miu opened its largest flagship store in Wuhan, China, as part of its expansion strategy [10] Acquisition Plans - Prada Group announced the acquisition of Italian luxury brand Versace for €1.25 billion, expected to complete in the second half of 2025, although analysts predict short-term profit pressure due to the acquisition [10]

Core Viewpoint - Prada is facing a significant brand crisis due to the controversy surrounding its global ambassador, Kim Soo-hyun, which has led to a rapid decline in its stock price and raised concerns about its endorsement strategy [2][4][6]. Group 1: Brand Crisis and Stock Impact - Kim Soo-hyun's involvement in a scandal has resulted in Prada terminating its contract with him to mitigate brand damage [2][5]. - Following the scandal, Prada's stock price dropped over 11% within five trading days, indicating heightened sensitivity to celebrity endorsements [4][6]. - The brand has experienced a series of endorsement crises, leading to a perception of a "endorsement curse" that affects its reputation and financial performance [3][5]. Group 2: Endorsement Strategy and Market Position - Analysts suggest that Prada's reliance on high-profile celebrities for endorsements has made its stock price more volatile compared to competitors, necessitating a shift towards a more stable endorsement strategy [7]. - The luxury market is increasingly favoring ambassadors who align with brand values rather than just popularity, as indicated by consumer preferences [7]. - Despite attempts to diversify its ambassador roster, including signing athletes and artists, Prada's financial performance has not shown significant improvement [8][10]. Group 3: Financial Performance and Growth Challenges - Prada's retail sales growth has stagnated, with a reported increase of only 4% in 2024, returning to pre-pandemic growth rates [8]. - The brand's struggles are compounded by a lack of product innovation and operational efficiency, which have hindered its ability to attract younger consumers [9]. - The CEO highlighted challenges in the Chinese market, where growth has been inconsistent, emphasizing the need for a strategic overhaul in product offerings [9][10]. Group 4: Future Outlook and Strategic Adjustments - Prada is seeking to adjust its brand strategy by enhancing cultural activities and reinforcing its brand identity, moving away from reliance on individual designer influence [10]. - The company must focus on reconnecting with its core brand values to navigate the current crisis and improve its market position [10].