Подобрий Михаил
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LVHM- give luxury a chance.

LVMH Moët Hennessy Louis Vuitton SE, better known asLVMH, is a Europeanmultinationalluxury goods conglomerate, headquartered inParis,France. The company was formed by the 1987 merger offashion houseLouis Vuittonwith Moët Hennessy, a company formed after the 1971merger betweenthechampagne producerMoët & ChandonandHennessy, thecognacmanufacturer.

Company industry
P/E Ratio (TTM) 14.33 24.84
Gross Margin (TTM) 64.44 40.31
Dividend Yield 2.03 1.61

LVMH Moët Hennessy Louis Vuitton, the world’s leading luxury products group, recorded an 18% increase in revenue, reaching €25.3 billion, for the first nine months of 2015. Organic revenue grew 6% compared to the same period in 2014.

With organic revenue growth of 7% for the third quarter, the trend remains comparable to that recorded in the first half of the year. The Group continues to deliver strong growth in Europe and the United States, and is seeing an acceleration in Japan.

The LV brand accounts for 64,44% group EBIT on our estimates and, while we do not view it as being immune to global price convergence, we think the brand is better placed than peers. This reflects its full control over distribution and health of the underlying brand momentum. We assume a price decline of 2% in FY16 for the LV brand, but this is offset by 4% increase in volumes.).

LVMH is one of the most defensive assets in global consume at one of the most attractive multiples. On our 2016 estimates, LVMH trades on 20.5x P/E. This could be 40% profit.

New background

In a report Morgan Stanley raised its price target for LVMH(MC.Paris/LVMHF)to 185 euros from 173 euros.

Global luxury goods sales hinge on Asia, where we can see international brands cut their product pricing by 15% over the next two years, according to Morgan Stanley. This can’t bode well for the entire luxury sector, which historically relied 25% of its growth on price increases.

It makes sense global luxury brands will have to slash their retail prices in Asia. On average, luxury goods sold in Hong Kong are still 29% higher than in Europe, despite a series of price cuts from Chanel for instance. Lured by cheaper euro, Chinese tourists were swarming to Europe this summer to get their luxury handbags and watches.

Tourist flows to western Europe will be clearly down in the coming weeks and this just ahead of the Christmas period. LVMH declined 1.5 percent to 160 euros.

While Louis Vuitton is not immune to retail price cuts, it is more resilient than its peers. In addition, LVMH is a lot more diversified than just selling handbags and is attractively valued.

The terrorist attack on Paris in the short-term hit of sales and stock prices of LVHM. At the same time LVHm feels better than the competition and in the long term. Now there is an opportunity to buy shares at an attractive price.

Technical analysis

LVMH quotes entered a new price band (150-175) and are traded there since March. Most likely the price will continue to move to the lower limit of the corridor (at least to 155-157) and only then after consolidation can be expected upward movement conditionality fundamentals. I'd recommend to purchase from the lower classes, as it will give an additional margin of safety to investment.