Travel Demand Recovery in Asia Bodes Well for Samsonite’s Sales Growth; Shares Undervalued

Narrow-moat Samsonite’s 01910 fourth-quarter results were in line with our and PitchBook’s consensus expectations. Management provided more upbeat guidance for 2023, following very encouraging sales trends in the first two months of 2023. Since we had already anticipated stronger growth and profitability this year, we only made minor changes to our near-term forecasts and keep the bulk of our long-term assumptions unchanged. After rolling forward our valuation model, we slightly increased Samsonite’s fair value estimate to HKD 26.50 from HKD 25.00. Samsonite’s shares remain undervalued, trading at a 20% discount to our fair value estimate.

Travel recovery was still the main driver of growth in the fourth quarter for Samsonite—lifting the group’s revenue by 23% year over year. Relative to prepandemic periods, comparable sales recovered to 98% of that in the fourth quarter of 2019. The company also reported very encouraging trends for January and February of 2023, with comparable sales up 16.5% versus 2019. Since the business started 2023 very strong out of the gate, management lifted full-year sales guidance to a 15% increase versus 2019, from 10% previously. A stronger sales outlook also leads to higher profitability guidance for 2023—with adjusted EBITDA margin expected to come in at 17%-plus against 16.5%-plus previously. All in all, management’s revised guidance translates to more than an 8% increase in the adjusted EBITDA outlook for 2023.