Richemont

Analyst thesis

Our recommendation is based on: 

• Valuations are elevated from a P:E and EV:EBIT perspective.
• The watch segment, contributing 15% of revenue, faces growth headwinds as seen in slowing Swiss watch exports.
• Growth regions such as Japan are normalising from previous highs (after cheaper Yen saw a spike in tourist spend), and Asia Pacific growth remains dampened (as China’s economic conditions have negatively impacted demand).
• Cost pressure (especially rising precious metal and material costs) could further place pressure on profit margins.