Prada: Solid Revenue Growth on Improved Brand Momentum

We are increasing our fair value estimate for Prada 01913 to HKD 48 from HKD 38 as we incorporate full-year 2022 results and first-quarter revenue into our models. Around 15% of the fair value estimate increase stems from currency moves and time value of money, while the rest is driven by our assumptions for stronger near-term growth helped by brand momentum and faster margin scaling. We still view shares as expensive at current levels.

Sales momentum continued strongly in the first quarter, up 22% for the group, with a strong showing in Europe (28%) and Asia (22%), and still positive albeit slower growth in the Americas with a 5% increase. Prada’s revenue growth in the quarter was at the higher range of previously reported peers (only Moncler, Hugo Boss, and Hermes had stronger revenue growth). Miu Miu’s performance accelerated remarkably to 42% growth, while Prada brand revenue was up 21%. The ready-to-wear and footwear categories led growth, boosted by brands’ fashion momentum (and hence could be volatile), but leather goods also grew strongly at 14%.