汇丰银行-全球-奢侈品行业-为什么中国要以全球奢侈品市场两倍的速度增长？-2019.4-63页.pdf

Disclosures&Disclaimer:This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it.Play video withErwan RambourgEquitiesGlobal Luxury GoodsApril 2019By:Erwan Rambourg,Antoine Belge and Anne-Laure BismuthPanda Luxury Staycation Why China should grow at twice the globalluxury market paceRecent RMB appreciation is supportive to sales with traveling Chinese,mostly in AsiaBut shifts in pricing,e-commerce,and travel retail mean repatriation of growth in mainland China seems structural,growing at 12%vs 6%globally per our estimates in 2019 We see Kering,Swatch,Richemont,and SMCP(all Buys)and Burberry(Hold)well-placed to benefit from that repatriation of growthSP OTLIGHT 1 Equities Global Luxury Goods April 2019 The pandas 2019 travel log We have little doubt that in 2019 Chinese consumption will once again help support global growth in the luxury sector.While there may be some short-term growth abroad,we believe that in the long run,luxury consumption in China itself will grow more.Two key themes we see playing out with Chinese travel:This year,we think that luxury consumption outside of China will benefit,particularly as the RMB has strengthened relative to key currencies in countries where luxury consumption happens.Our traveling pandas tend to follow the money,particularly the weaker currencies,so this bodes well for luxury consumption outside of China.Other supportive factors include the easing of visas in many destinations,which makes it easier for Chinese tourists to travel,but we think that the action will happen more in Asia than in Europe(security)and the US(cost).Long term,luxury consumption will happen incrementally at home.Key structural factors that discouraged luxury consumption in China in the past are resolving,and the progress made is already bearing fruit.As we noted in our recent report Too Bling to Fail(26 Feb 2019),a few years ago,75%of Chinese luxury sales happened outside of China.We see that moving to 50-50 either this year or next.The structural factors supporting the increase in domestic consumption include the harmonization of prices,which makes shopping abroad less appealing as the prices normalize;the continued development of e-commerce in China which facilitates easier shopping experiences;and investments in infrastructure and travel retail which encourage shopping at home.In our view,China became margin-accretive last year for the sector and now stands to expand both the top line as well as the margins for luxury.Key stocks we think should benefit from the repatriation of luxury consumption in China include Kering,Richemont,SMCP,and Swatch,all rated Buy.We also discuss the implications for Burberry,on which we have a Hold rating.Per our estimates,these stocks have the greatest exposure to the Mainland in our coverage and therefore stand to benefit the most from the repatriation of growth.For a recap of other luxury themes and stock preferences,please refer to our recent Too Bling to Fail thematic report published 26 February 2019.Why read this report?Recent RMB appreciation is supportive to sales with traveling Chinese,mostly in Asia But shifts in pricing,e-commerce,and travel retail mean repatriation of growth in mainland China looks structural,growing at 12%vs 6%globally per our estimates in 2019 We see Kering,Swatch,Richemont,and SMCP(all Buys)and Burberry(Hold)well-placed to benefit from that repatriation of growth Erwan Rambourg Global Co-Head of Consumer and Retail Research HSBC Securities(USA)I+1 212 525 8393 Equities Global Luxury Goods April 2019 2 Why read this report?1 Pandas travel and spend 3 Related research 4 Recommended reading.4 Recommended viewing.4 Calendar of events 5 Executive Summary 6 Mainland China to grow at twice the luxury industry pace 6 Traveling pandas and the stronger RMB 9 This great big world is calling 9 Pandas traveling close to home 16 Expanding the pandas horizon 27 Bringing it all back home 32 Home is where the heart is 32 As growth heads home,what are the implications?40 Company profiles 44 SMCP 44 Richemont 45 Swatch 46 Kering 47 Burberry Group 48 Disclosure appendix 55 Disclaimer 60 Contents 3 Equities Global Luxury Goods April 2019 Pandas travel and spend Source:Sales abroad/sales at home:HSBC estimates;Luxury sales growth:HSBC estimates;Hong Kong where to purchase:HSBC China Deluxe 2019,Toluna;9%have a passport:Ctrip,Jing Travel 26 Jan 2018;Same day/overnight:Hong Kong Tourism Bureau Strong Chinese economy and high consumer confidencecould fuel consumption and growth making an encouraging environment for the Pandas travel and tourism12%6%0%10%20%30%40%50%1st choice2nd choice3rd choiceHong Kong is the top choice for where to purchase luxury goodsSame day and overnight visits toHong Kong were up in 2018-20%-10%0%10%20%30%40%2011201820152020Repatriation of growth:Chinese luxuryspending is shifting to homeOverall luxury sales growth in 2019eTop categories on which Chinese arewilling to spend more:MainlandChinaGlobalaverage20%HK same day7%HKovernightCosmeticsAccessoriesShoesJewelryApparelPerfumeOtherTaiwanThailandMacauSingaporeKoreaUKItalyChinaUSJapanFranceHong KongOnly 9%of Chinese had apassport in 201775%Salesabroad25%Salesat home50%Salesabroad50%Salesat home Equities Global Luxury Goods April 2019 4 Related research Recommended reading.Too Bling to Fail Why scale and M&A should matter even more for luxury 26 February 2019 Return of the Red Bull Year of the Dog:Chinese consumers are back,but will that be enough?7 March 2019 China Deluxe 2019 Checking in on luxury consumption in China 19 February 2019 China Deluxe 2018 Anatomy of the future luxury consumer 7 March 2018 Luxury Postcard from Asia Repatriation of growth to the mainland has got legs 11 March 2019 Luxury Pricing Barometer RMB strength could start to make a difference 27 February 2019 Recommended viewing.Too Bling to Fail Why scale and M&A should matter even more for luxury Global Co-Heads of Consumer and Retail Research,Erwan Rambourg and Antoine Belge,outline the findings of our latest look into the worldwide luxury sector.26-Feb-2019 China Deluxe 2019 Checking in on luxury consumption in China Erwan Rambourg,Global Co-Head of Consumer and Retail Research,reveals the findings of our second China Deluxe survey into luxury spending in mainland China.19-Feb-2019 5 Equities Global Luxury Goods April 2019 Corporate calendar of events through H1 2019 Company Type of Event Date Burberry FY 2019 results 16-May-19 Capri Q4 2019 results 28-May-19 Capri Q1 2020 results 6-Aug-19 Hermes Q1 2019 sales 25-Apr-19 Hermes Q2 2019 sales 23-Jul-19 Hugo Boss Q1 2019 results 2-May-19 Hugo Boss Q2 2019 results 1-Aug-19 Kering Q1 2019 sales 17-Apr-19 Kering H1 2019 results July,2019 LVMH Q1 2019 sales 8-Apr-19 LVMH H1 2019 results 22-Jul-19 Moncler Q1 2019 results 9-May-19 Moncler H1 2019 results 24-Jul-19 Prada H1 2019 results 30-Jul-19 Richemont FY 2019 results 17-May-19 Richemont Q1 2020 Trading update 18-Jul-19 Salvatore Ferragamo Q1 2019 results 14-May-19 Salvatore Ferragamo Q2 2019 results 30-Jul-19 SMCP Q1 2019 sales 29-Apr-19 Swatch H1 2019 results End of July,2019 Tapestry Q3 2019 results 29-Apr-19 Tapestry Q4 2019 results 12-Aug-19 Tiffany Q1 2019 results 4-Jun-19 Tiffany Q2 2019 results 26-Aug-19 Tods Q1 2019 sales 9-May-19 Tods H1 2019 results 7-Aug-19 FHS data March statistics 18-Apr-19 FHS data April statistics 28-May-19 FHS data May statistics 20-Jun-19 FHS data June statistics 18-Jul-19 Source:Company websites,Refinitiv,HSBC estimates Calendar of events Equities Global Luxury Goods April 2019 6 Mainland China to grow at twice the luxury industry pace We have little doubt that in 2019 Chinese consumption will once again help support global growth in the luxury sector.Globally,many countries stand to benefit from Chinese luxury consumption in the short term.But while there may be some short-term growth abroad,we believe that in the long run,luxury consumption in China itself will be as relevant.This year,we think that luxury consumption outside of China will benefit When we last wrote about Chinese luxury consumption and updated our Panda Travel Log,the EUR was strong and we worried that luxury consumption in Europe and outside of China would suffer as a result(see Return of the Red Bull,7 Mar 2018).This year,we think that consumption outside of China will be supported.Many indicators for luxury consumption are still at twenty-year highs,and our economists think Chinese consumption is likely to be resilient despite negative headlines.Further supporting this appetite is a stronger RMB.As we explained in our recent update of our Luxury Pricing Barometer(27 Feb 2019),our traveling pandas tend to follow the money,particularly the weaker currencies,so this bodes well for luxury consumption outside of China.But many countries are taking more initiatives to attract Chinese tourists than relying on a stronger RMB alone.These factors include new infrastructure and the easing of visas in many destinations,all to make travel to those countries more appealing to Chinese tourists.Ultimately,we think that the action will happen in Asia this year,as opposed to Europe(security concerns)and the US(cost).Below,we highlight our Chinese travel estimates for key luxury consumption markets.We explore each country in detail in the report.We see domestic travel up double digits again this year as well as outbound travel to key markets.Chinese tourism data and estimates in 000s 2013 2014 2015 2016 2017 2018*2018 vs 2017*CAGR 13-18 2019 Estimate 2019e vs 2018 growth 1.Hong Kong 40,745 47,248 45,842 42,778 44,445 51,038 14.8%4.6%56,000 9.7%2.Macau 18,632 21,252 20,411 20,454 22,196 25,261 13.8%6.3%27,800 10.1%3.Thailand 4,637 4,636 7,964 8,757 9,806 10,536 7.4%17.8%11,600 10.1%4.Japan 1,314 2,409 4,994 6,373 7,356 8,380 13.9%44.8%9,300 11.0%5.Korea 4,327 6,127 5,984 8,068 4,169 4,790 14.9%2.1%6,500 35.7%6.Vietnam 1,908 1,947 1,792 2,697 4,008 4,966 23.9%21.1%5,500 10.7%7.Singapore 2,270 1,722 2,106 2,864 3,227 3,416 5.9%8.5%3,550 3.9%8.Malaysia 1,791 1,613 1,677 2,125 2,282 2,944 29.0%10.4%3,000 1.9%Lucky 8 75,625 86,955 90,769 94,116 97,489 111,331 14.2%8.0%123,250 10.7%Taiwan 2,875 3,987 4,184 3,512 2,733 2,696-1.4%-1.3%2,500-7.3%Australia 709 840 1,026 1,199 1,357 1,432 5.5%15.1%1,500 4.7%UK 288 185 270 260 337 361 7.1%4.6%375 3.9%US 1,807 2,190 2,629 3,050 3,174 3,145-0.9%11.7%3,150 0.2%Dubai 0 350 450 540 764 857 12.2%25.1%950 10.9%Total Outbound 98,185 116,593 127,860 135,130 142,727 161,990 13.5%10.5%173,329 7.0%Total Domestic 3,262,000 3,611,000 3,990,000 4,435,000 5,001,000 5,539,000 10.8%11.2%6,092,900 10.0%*Italics are estimates Source:JNTO,KNTO,DSEC,HKTB,STB,TTB,ABS,NTTO,DSC,OTTI,CEIC,ONS,HSBC estimates Executive Summary 7 Equities Global Luxury Goods April 2019 Long term,we expect luxury consumption will happen at home However,we remain convinced that the structural changes happening in China cannot be ignored.In the long term,we believe that luxury consumption for Chinese consumers will shift from happening abroad to happening at home.Key structural factors that discouraged luxury consumption in China in the past are resolving,driving the change in consumption patterns.These seismic shifts in Chinas luxury market include price harmonization;the continued development of e-commerce platforms and investments in infrastructure and travel retail which encourage shopping at home.These structural changes are already bearing fruit.As we noted in our recent report Too Bling to Fail(26 Feb 2019),a few years ago,75%of Chinese luxury sales happened outside of China.We see that moving to 50-50 either this year or next,and some brands are already seeing mainland sales increase to c50%of their total Chinese sales.As these shifts continue to play out,we expect China to grow at twice the rate of the rest of the global luxury industry in 2019,12%vs 6%,respectively.We also believe that the growth will flow through the P&L as China,which used to be margin-dilutive,is now margin-accretive as of last year.We explore this in greater detail in the report.HSBC Luxury Goods:Contribution of each geographic region to organic sales growth 2007a 2008a 2009a 2010a 2011a 2012a 2013a 2014a 2015a 2016e H1 2017a H2 2017a 2017a H1 2018a H2 2018e 2018e 2019e 2020e Geographic breakdown Europe 42%42%39%36%34%32%33%33%34%34%33%33%33%31%31%31%30%29%Japan 12%12%11%9%8%8%7%7%8%8%8%8%8%8%8%8%8%7%US 20%19%18%18%18%18%19%19%20%20%19%19%19%19%19%19%19%19%China 3%5%6%8%10%10%10%10%10%11%11%11%11%12%12%12%13%13%Rest of Asia&other 22%23%25%28%29%31%31%31%28%28%29%29%29%30%30%30%31%31%Total 100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%Organic sales growth rate Europe 13%5%-7%9%12%7%4%4%10%0%6%4%5%5%3%4%2%2%Japan 6%-9%-15%-4%4%3%10%7%19%0%3%5%4%12%7%10%4%2%US 16%2%-14%14%24%14%12%8%2%-2%5%6%6%10%8%9%6%7%China 40%45%30%45%47%19%11%5%1%6%15%21%18%15%15%15%12%12%Rest of Asia&other 22%13%8%23%27%14%10%5%-8%1%11%13%12%14%10%12%9%9%Total 15%6%-4%15%20%11%8%5%3.0%0.4%8%9%9%10%8%9%6%6%Source:Company data,HSBC estimates How Chinas luxury P&L has changed:peak,trough,and 2018 Global P&L Fixed Variable China Peak(2011-12)China Trough(2014-15)China in 2018 Net sales 100 100 100 100 Cost of goods 30 25 27 30 Gross profit 70 75 73 70 Gross margin 70%75%73%70%Store expenses o/w personnel 7 75%25%3 5 4 o/w rents 10 50%50%6 8 7 o/w D&A 3 100%3 4 3 o/w other 3 60%40%3 3 3 Subtotal 23 65%35%15 20 17 G&A 14 80%20%17 21 16 Communication 7 70%30%14 13 11 Selling 3 50%50%3 3 3 Total operating expenses 47 69%31%49 57 47 EBIT 23 26 16 23 EBIT margin 23%26%16%23%Source:HSBC estimates Equities Global Luxury Goods April 2019 8 Key stocks for which repatriation theme is relevant The repatriation of growth carries significant implications for the luxury companies in our coverage.As growth increasingly shifts to China,not all luxury companies will be positioned to profit from this shift.We continue to expect a soft landing in luxury(highlighted in our 2019 outlook report Expecting the unexpected,8 Jan 2019),and as such,we believe that Kering,Richemont,SMCP,and Swatch(all Buy)and Burberry(Hold)are well-positioned for greater domestic consumption in China.Summary of ratings and target prices Ticker Currency CMP TP Upside Rating Market cap(USDm)2019e PE 2020e PE 2019e EV/EBITDA 2020e EV/EBITDA SMCP SMCP FP EUR 15.35 21.00 37%Buy 1,270 16.9x 12.7x 7.0 x 5.8x Richemont CFR SW CHF 71.24 90.00 26%Buy 41,131 23.1x 19.3x 11.3x 9.5x Swatch UHR SW CHF 281.10 355.00 26%Buy 15,520 14.9x 13.4x 7.1x 6.2x Kering KER FP EUR 502.00 600.00 20%Buy 71,330 18.7x 16.8x 12.4x 11.0 x Burberry BRBY LN GBPp 1,897.00 2,000.00 5%Hold 10,293 23.1x 21.1x 12.0 x 10.5x Source:Refinitiv Datastream,HSBC estimates,priced as of 27 March 2019 9 Equities Global Luxury Goods April 2019 This great big world is calling Chinese consumers were hungry to travel in 2018 and we expect that appetite to stay strong in 2019.We