Swatch Group (AO) | Reduce | Swatch shutters shops on Royal Pop crowds, secondary prices

研报英文原文证据摘录

Swatch Group (AO) | Reduce | Swatch shutters shops on Royal Pop crowds, secondary prices

Swatch Group Reduce | Target Price: CHF165.00

Company description Management

Swatch Group is the world's biggest watchmaker. It is vertically integrated with a Chairwoman Nayla Hayek

portfolio of brands ranging from the Swatch watch through Tissot, Longines and CEO Nick Hayek

Breguet. Omega is its largest business while it has exposure to jewellery through Board member Marc Hayek

Harry Winston. Swatch Group has substantial exposure to greater China. It is

controlled and managed by the founding Hayek family, which has an Key shareholders

antagonistic relationship with the market, and there are concerns about insular Free float 76.80% Hayek Pool 23.20%

governance as well as succession.

Investment case Valuation methodology

Swatch Group is a dominant maker of Swiss watches, a market We use a mixture of multiples and increasingly look at book

that typically grows by c. 4% annually, led by high-end watches. value but we struggle to see a way for investors to extract the

China, its biggest market, is recovering slowly and is unlikely to obvious cash value under existing management.

return to past growth rates, while there remains a lot of Our DCF includes our numbers for the next few years, assumes

uncertainty about the US, a bright spot for the company. 3% medium-term growth, a 2% terminal growth rate, and a 10%

The controlling family seems unconcerned about the opinion of WACC. We include a governance discount of 20%.

investors and there is no IR to steer consensus, which makes for Risks to our rating

a lot of volatility. China rebounds much faster than expected.

Catalysts A change in management attitude toward the market including

Monthly watch export data.