Guotai Haitong Securities released a research report maintaining an "Overweight" rating on Prada (01913). With Miu Miu's spatial expansion continuing in 2026 and the consolidation of Versace contributing new growth momentum, the firm forecasts the company's net profit attributable to parent for 2025-2027 to be €880 million, €960 million, and €1.05 billion, representing year-on-year growth of 5.2%, 8.7%, and 9.0%, respectively. Applying a 2025 P/E ratio of 20x and converting at an exchange rate of 1 Euro = 9.3 HKD, the corresponding target price is HKD 64.13.
The report stated that the group demonstrated resilience amidst a high base, though currency fluctuations may cause short-term profit volatility. It projects the group's full-year 2025 retail sales to grow by a high-single-digit percentage at constant exchange rates, leading the industry. For Q4 2025, retail sales are expected to grow at a mid-single-digit rate at constant exchange rates, slightly slower than Q3. By brand, Prada's Q4 retail growth is anticipated to improve from -1% in Q3 to roughly flat, while Miu Miu is expected to achieve 15-20% growth in Q4, reflecting sustained brand heat and momentum despite the high base of the past two years. On the profit side, the bank estimates a negative foreign exchange impact of approximately 700 basis points in Q4 and around 400 basis points for the full year.
Looking ahead to 2026, Miu Miu's spatial expansion is set to continue, and the consolidation of Versace will contribute new volume. The firm expects Miu Miu to increase its retail selling space by 10%-15%, focusing on Europe and Asia, with further expansion planned for the under-penetrated US market in 2027. The Prada brand will focus on balancing "strategic price points," reaching a broader customer base by strengthening its nylon series while attracting high-net-worth clients with limited-edition leather goods. The acquisition of Versace was formally completed on December 2, 2025, with consolidation expected in 2026. According to disclosures, Versace's revenue as of the end of March 2025 was approximately €705 million, with an operating loss of around €46 million. Future synergies are expected from shared supply chain and retail operational expertise.
Analyzing the customer base and markets, China is showing signs of bottoming out and stabilizing. Japan faces short-term headwinds from tourism consumption, but the purchasing power of Chinese consumers traveling abroad remains stable. Europe has slowed due to weaker tourism, while the US remains robust despite a high base. The report suggests the luxury goods industry has transitioned from high-speed growth to a "new normal," characterized by market share concentration towards companies with strong brand DNA. The broader industry trend is shifting back from conspicuous consumption and brand-driven purchases to authenticity and value-driven choices.
The outlook remains positive for Miu Miu's growth potential, primarily driven by: 1) the brand's sustained high-quality growth, with most increases coming from same-store sales despite a high base; 2) significant future store opening potential, as the brand had only 147 directly operated stores globally at the end of 2024, compared to over 300 stores for brands like YSL and BV; and 3) the establishment of a differentiated brand identity in recent years, positioning it to benefit from the industry trend of entry-level consumers diversifying away from ultra-luxury brands. Prada showed sequential improvement in Q3 2025. Looking forward, by continuously increasing creative investment in leather goods, enhancing marketing for iconic products like the Galleria bag, and expanding the Re-Nylon collection to bolster its entry-level price offerings, the brand is well-positioned to broaden its consumer reach. Risks include a deterioration in the retail environment, intensifying industry competition, and worsening brand partnerships.
Comments