摩根士丹利-欧洲-媒体行业-中国社交媒体的热点是什么？-2019.7.10-29页.pdf

Edouard.AElena.MKimberly.GLauren.CIn-LineMORGAN STANLEY&CO.INTERNATIONAL PLC+Edouard AubinEQUITY ANALYST+44 20 7425-3160Elena MarianiEQUITY ANALYST+39 02 7633-5434MORGAN STANLEY&CO.LLCKimberly C GreenbergerEQUITY ANALYST+1 212 761-6284Lauren CasselEQUITY ANALYST+1 212 761-4143BrandsEuropeIndustryView0.05.010.015.020.025.030.035.0201120122013201420152016201720182019ChanelLouis VuittonGucciDiorBurberryArmaniSaint LaurentHermsPradaGivenchySearch trend of soft luxury brandson Baidu-the first tranche,2011-2019in thousands0246810121416201120122013201420152016201720182019CartierTiffanyBulgariVan Cleef&ArpelsChaumetHarry WinstonChopardSearch trend of jewellery brandson Baidu,2011-2019in thousands024681012201120122013201420152016201720182019LonginesOmegaTissotRolexVacheron ConstantinMontblancPiagetJaegerPaneraiIWCBreguetAudemars PiguetPatek PhilippeSearch trend of watch brandson Baidu,2011-2019in thousandsSource:Baidu Index,Morgan Stanley ResearchBrandsBrands|Europe EuropeWhats hot in China on socialmedia?Chinese nationals are expected to account for 30%and 70%of global sporting goods brands and European luxury goodsbrands sales growth over the next 5-10 years,respectively.Social media is more important in China than in any othercountry.We explore how brands are currently trending there.We conducted our social media analysis using the Baidu and Weibo indexes.Baidu is positively correlated to search traffic(similar to Google).Weibo ispositively correlated to posting and reposting(similar to Twitter).Note that thisreports findings provide an indication of each brands individual heat but weacknowledge its limitations:WeChat data is not included(as the data cannot beaccessed for analysis)and brand heat can be temporarily distorted by brandsspending on social media(e.g.spending on collaboration with key opinionleaders)-rather than reflecting genuine desirability/interest.Three key takeways:1)large luxury brands continue to outperform counterintuitively,while consumers are increasingly better educated aboutbrands,this is not leading to market fragmentation;2)LVMH is firing on allcylinders;3)the jewelry category continues to outperform Swiss watches.In soft luxury,our analysis of search trends indicates that brands on the way upare Vuitton,Dior,Chanel,Herms and Moncler.Vuittons progress has beenconsistent over the years(unlike Chanel)and interest in the brand seems to havebeen very strong in 1H19(both Baidu and Weibo).Burberry and Ferragamosmomentum YTD seem to have been limited.Brands on a downward trend in2019 are Gucci and Saint Laurent(both to a limited extent).Prada has alsoremained on the way down YTD in terms of searches,despite a pick up inspending in June(i.e.its collaboration with Xukun Cai and Kai Zheng).So haveHugo Boss,Tods,Versace,Balenciaga,Dolce&Gabbana,and Dunhill.For hard luxury,no dramatic inflection point in 1H19 vs.long term trends.Injewelry,Bulgari and Cartier continued to capture share of eyes,along withChopard(which seems to have spent heavily on social media in 2Q19).In 1H19,interest in Tiffany seems to have remained on a downward trend in China.Regarding Swiss watches,interest in Omega picked in 1H19(the brand isstructurally on the way up in China),as well as for Jaeger(Richemont).Searchtrends for other Richemont watch brands(Vacheron,Montblanc,IWC,Piaget,etc.)were flat to down.Longines,Tissot and Breguet(Swatch Group)do notseem to enjoy the same momentum as previously.On sporting goods,Nike remains an all-time winner,although Adidas and Filasaw the most noticeable pick-up YTD.New Balances multi year long declininginterest continued YTD.UA,Nike and Puma were essentially flattish in H119.Morgan Stanley does and seeks to do business withcompanies covered in Morgan Stanley Research.As aresult,investors should be aware that the firm may have aconflict of interest that could affect the objectivity ofMorgan Stanley Research.Investors should considerMorgan Stanley Research as only a single factor in makingtheir investment decision.For analyst certification and other important disclosures,refer to the Disclosure Section,located at the end of thisreport.+=Analysts employed by non-U.S.affiliates are not registered withFINRA,may not be associated persons of the member and may notbe subject to NASD/NYSE restrictions on communications with asubject company,public appearances and trading securities held bya research analyst account.1July 10,2019 03:00 AM GMT Investment ImplicationsConglomerates/large brands outperforming mono brands YTD on social media.Asfollowers of the industry will be aware,over the past two decades,conglomerates salesand profit growth has outperformed mono brands in general.This is particularly true forthe two largest of them:LVMH and Kering.This can be counter-intuitive in a creativeindustry where organizational size and complexity could stifle creativity.It is alsocounter-intuitive that large brands would continue to grow faster today given that size/ubiquity typically dampens a brandss desirability.However,we show in this note thatbrand heat has remained higher YTD for the largest ones(Vuitton,Cartier,Herms,Chanel,etc.,Gucci being the one exception in our survey),and we expect that this shouldhave translated to another strong sales performance in 2Q19 for the large brands/conglomerates.From an investment standpoint,we have favored conglomerates overmono brands in general,as we believe that conglomerates benefit from economies ofscale in a)the ability to attract,retain and promote top talent;b)the ability to accept/withstand a profitability reset at the individual brand level;and c)increasingly,scalebenefits when it comes to digital(from both a communication and an eCommercestandpoint).For more details,see our note here.Our analysis of social media trends inthis report suggests that conglomerates/large brands have enjoyed better momentumon social media in China YTD.This supports our preference for conglomerates overmono brands(with a few exceptions,such as Moncler).SOFT LUXURYLVMH(Overweight):strong across the board.We have two main takeaways for LVMHfrom our social media analysis.First,the trend data we gathered suggests that interestin the Vuitton brand(c.48%of LVMHs consolidated profits in 2018,as per MorganStanley estimates)has continued to increase YTD and remains industry-leading.This isdespite the fact that the brand is the largest luxury goods brand in the world,withestimated sales of 10.4bn in 2018.When it comes to product,distribution andcommunicating,Vuitton has continued to invest and innovate at a very strong rate,andthis has translated to its desirability growing faster than its diffusion(i.e.sales).Thesecond takeaway is that LVMHs performance is broad-based YTD when it comes tosocial media in China and not limited to Vuitton:Dior,Celine,Loewe and Bulgari havecontinued to enjoy good momentum on social media in China in 2Q19.While LVMHsshare price has gone up materially YTD and the stock is now close to our PT of 380per share,we believe that the stock could benefit from the combination of both furtherearnings upgrades(we see upside risk post the publication of 1H19 results this month)and,more importantly,further re-rating:LVMH is trading on 2020 PE of 23x.Thiscompares to 25-30 x for other high quality global consumer names,such as Nike,Adidas,LOreal and Estee Lauder.Kering(Equal-weight):some deceleration.Based on our analysis,Kerings two leadingbrands-Gucci(c.80%of profits)and Saint Laurent(c.10%)-did not score particularlywell.As mentioned previously,social media studies should be taken with care and therehas been a number of occurrences where a decline in some social media metric has notled to any material slowdown in sales.For example,interest in the Gucci brand hit anall-time high in 4Q17,yet Gucci sales have continued to grow double digit YoY every2quarter since then-and this should have been the case again in 2Q19.That being said,while a number of competing brands have shown further strong performance in2Q19/1H19(e.g.LVMH),interest in Gucci and Saint Laurent seems to have peaked a fewquarters ago(and searches on Baidu were down double digit YoY in 2Q19).This might bedue to the fact that both Gucci and Saint Laurent may have prioritized profitability inrecent quarters over top line growth:we expect both Gucci and Saint Laurent to reportrecord high margins in 1H19,while Weibo results seem to indicate that Gucci and SaintLaurent may not have been heavy spenders on Chinese social media year to date.As forBottega Veneta,we have not witnessed any pick up on Weibo and Baidu in the past fewmonths,despite new Creative Director Daniel Lee launching his new collection inFebruary 2019.We remain Equal-weight on Kering.While the stock is certainly cheaprelative to other Luxury Goods or Consumer growth names,the deceleratingmomentum at Gucci(first in Europe,then the US and potentially now China)will capvaluation multiple expansion in the medium term,in our opinion.Moncler(Overweight):steady growth path.Moncler has demonstrated strong growthmomentum since 2011,proving to be the only emerging name among the smallermonobrands.This is consistent with our view on managements successful strategy ofprogressive expansion in the region(where the brand was practically unknown just afew years ago),consistent product innovation and strong traction particularly amongthe younger customer base(the main growth driver in luxury).The Chinese cluster grewfrom a negligible percentage to c.33%of the brands sales today.We expect the brand tocontinue its penetration and awareness to improve further,given it is the only companyin our universe still in store expansion mode(and a store base in China still muchsmaller vs.peers).We maintain our Overweight stance on the stock.Burberry(Equal-weight):awaiting a new chapter.Burberry has had a more sluggishmomentum in recent years online.Although there seems to be no downward trend,thebrand is still far from catching up with the fast-growing popularity of its competitors.Emerging brands,often under the support of their respective conglomerates,have beenovertaking Burberrys place over the past decade.Under the current restructuring plan,management has been putting a lot of effort into boosting the popularity of the brand,particularly after the launch of the new collections under Creative Director RiccardoTisci.However,we have yet to see a pick up in trends on both Weibo and Baidu.Wethink trends will need to be monitored in the coming quarters,as the penetration of thenew collections in the brands Retail stores will increase and the recently startedcollaborations with various KOLs in streetwear might start to bring some more tangibleresults.We remain Equal-weight on the stock as for the time being we see no early signsof the brand momentum changing.Prada(Equal-weight):one to be monitored.The downward trend for Prada startedfrom 2014,and has moved hand-in-hand with the brands LFL deterioration.On Baidu,the brand fell from the top three ranking in 2014 to tenth place in 2019.We believe,though,that management has been working harder recently to improve its social mediavisibility and to catch up with peers on collaboration with various influencers.On Baidu,the brand has picked up momentum since May 2019,when it started to focus oncooperation with KOLs(despite remaining down yoy in terms of search trends).A similarpick up happened on Weibo,where the brand was the second most discussed in Q2.Yet,whether this momentum is sustainable into the future remains to be seen.In themeantime,we maintain our Equal-weight stance.3Salvatore Ferragamo(Equal-weight):further work to be done.Ferragamo hashistorically lagged behind peers in terms of marketing and social media strategy,hencewe have not been surprised by the findings of our analysis that indicate poormomentum for the brand since 2017(when the turnover in the C-suite started).Webelieve that the new management team has taken the right steps to create a new levelof engagement on social media(an angle that was lacking before)but we also think thatit will take time for the company to attract some new consumers to the brand,particularly giving the choice of remaining loyal to the brands more traditional andclassic DNA.Momentum on Chinese social media so far has been limited but weFerragamo is in the early stages of transformation and similar to Prada trends needto be monitored.We remain Equal-weight.Hugo Boss(Equal-weight):search trends on a downward path,but China still small forthe brand.Search trends for Hugo Boss have been on a downward path since 2017,andthe brand appears to be attracting limited interest among Chinese customers,althoughwe would argue that:i)the Chinese customer base represents a relatively smallpercentage of total sales for Hugo Boss(30%for luxuryplayers);ii)the brands DNA(more centered around classic menswear)does not farewell with very visible fashion bloggers or KOLs,which tend to sponsor more fashionproducts;iii)it would be inappropriate in our view to compare a high-end apparel brandlike Hugo Boss with core luxury players with a diversified product base across severalcategories.Still,as growth in China represents a core part of the companys 2022business plan,we nonetheless look at these findings with interest.Tods(Underweight):the worst performing soft-luxury brand.Despite the multiplecollaborations with Chinese influencer Tao Liang,also known as Mr.Bags,Tods hasbeen losing momentum since 2013 and search trends YTD are lagging behind all peers.This is consistent with our investment case on the stock,which implies continueddeterioration in the brand desirability and no positive LFL inflection point ahead for thetime being.Tods has been one of the very few brands recording an uninspiringperformance in China over the past quarters(vs.most of the luxury brands experiencingsolid growth in the region)and we do not expect this trend to change for now.Weremain Underweight on the stock.HARD LUXURYRichemont(Equal-weight):Cartier and VCA shining.Watches brands not showingmomentum.Overall,our analysis of Baidu and Weibo trends for Richemont supportsour view that Richemonts jewellery brands are performing structurally better in Chinathan its watch brands.A few surprises arose though,as per our findings,Cartier seemsto enjoy better momentum in China than Van Cleef&Arpels.While we believe thatCartiers solid performance is warranted by the strategic initiatives taken by CyrilVigneron(Cartiers CEO since 2016),based on what we heard from industry contacts inChina,VCAs desirability has continued increasing in that market.Hence,we are slightlysurprised by the pause seen YTD for VCA on social media.Vacherons deceleration is inline with our expectations as is that of IWC and Montblanc.When it comes to watches,a small(positive)surprise emerged with Jaeger-LeCoultre,which appears to be trendingup.We remain Equal-weight Richemont.Our findings support our view that performanceby brands remains mixed.4Swatch Group(Equal-weight):Omegas mo