UHR: Upgrade to Sector Perform - Collab crazy...

研报英文原文证据摘录

UHR: Upgrade to Sector Perform - Collab crazy...

eflect in our base case estimates which was not previously the EPS, Adj Diluted 0.05 5.18 8.50 9.44

Prev. 4.59 7.26 8.21 case. We may see consensus estimates revise upwards as the product is P/AEPS NM 40.0x 24.4x 22.0x

launched and visibility increases, which in our view had not anticipated a

collaboration of this scale and nature. Free float: 77%

All values in CHF unless otherwise noted.

Entry/mid-price watch export data has improved. Monthly Swiss watch Priced as of prior trading day's market close, EST (unless otherwise noted).

export data has been more supportive at the entry and mid-price points

and China/Hong Kong relatively more stable which we view as more

constructive for Swatch Group given its mid-tier brand portfolio (Longines,

Tissot, Rado) and volume driven brands.

Estimate changes and RBC vs consensus. We raise FY26E revenue by

2% and EBIT by 19%, and FY27E revenue by 6% and EBIT by 26%,

driven primarily by our estimates of the Royal Pop impact. RBC FY26E–

27E forecasts are now materially above pre-collaboration consensus. DCF

derived PT increases to CHF 220 (from CHF 160) on higher earnings, FCF,

higher outer year margins to 12% (from 10%) and slightly lower WACC

(8.7% from 9.0%).

Structural headwinds have not gone away. We remain mindful of ongoing

pressure on the entry/mid-price portfolio from smartwatch penetration,

stiff competition in higher price points for Omega, and Swatch Group's

structurally lower margins and returns profile. These factors keep us

at Sector Perform rather than Outperform, and we would need to see

evidence of more sustained organic volume recovery in the core portfolio

to become more constructive.

Valuation - Swatch trades at 24x RBCe P/E and 1.3x EV/sales (FY27E)