The Miu Miu wild card behind the discount

Research evidence excerpt

The Miu Miu wild card behind the discount

.6 1.5

preserving healthy margins (we estimate ~€40m EBIT in 2022 ~HSD% margin vs. ~ EV/EBITDA** 6.2 5.3 5.0 4.6

€500m in 2025, i.e. ~30% margin). That is a demanding assumption, given revenues EV/EBIT** 9.9 9.2 8.7 7.9

DPS (€) 0.16 0.15 0.15 0.17

have risen 3.9x since 2019 and the brand has generated >100% of Group EBIT Div yld (%) 3.3 3.5 3.6 3.9

growth since 2022, on our estimates. If Miu Miu were to follow the path of other FCF yld ratio (%)** 9.2 11.2 13.0 13.6

Net debt (€mn)* 471 313 (16) (361)

luxury mega-brands that have undergone a normalisation (contraction) phase, such Net debt/EBITDA** 0.2 0.1 NM NM

as Dior, Gucci and Saint Laurent (see Exhibit 5 ), the earnings downside from RNOA (%)** 16.5 11.5 11.2 11.5

ROE (%)** 19.9 16.3 15.5 15.6

operating deleverage could be substantial, quickly eroding the apparent valuation

Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

discount. Versace is a 2028 story at best, in our view: overall the cheapness has a framework

§ = Consensus data is provided by Refinitiv Estimates

rationale, the catalyst path is thin into 2027, and our base case still needs a couple * = GAAP or approximated based on GAAP

** = Based on consensus methodology

of things to go right (our recent channel checks remain positive on both Prada and e = Morgan Stanley Research estimates

Miu Miu). However, as it stands, we would not expect the shares to re-rate over the

next 12 months without brand momentum reaccelerating meaningfully at Prada or

Miu Miu. We therefore remain Equal-wight with a tactical bias to revisit.

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With this report, Natasha Bonnet assumes lead coverage of Prada. companies covered in Morgan Stanley Research. As a result,