To The Moon

Last Friday, the luxury giant $LVMH-Moet Hennessy Louis Vuitton(LVMHF)$ released its fourth quarter report, with results exceeding expectations. The stock price soared 12.8% in one day, helping the Arnault family regain the title of the world's richest person:

Specifically, LV's revenue in the fourth quarter was €23.948 billion, a 5.5% year-on-year increase:

After adjusting for exchange rates, mergers and acquisitions, asset divestitures and other factors, LV's fourth quarter revenue organically grew by 10%, beating analysts' consensus expectations of 8.17%.

By business, the core leather goods business generated €11.257 billion in revenue, an increase of 4% year-on-year; the selected retail business revenue was €5.454 billion, a 14.7% year-on-year increase; the jewelry revenue was €2.95 billion, a 1.8% year-on-year decrease; the cosmetics business generated €2.25 billionin in revenue, a 4.9% year-on-year increase; and alcohol revenue was €1.91 billion, up 2.1% year-on-year:

Compared to expectations, with the exception of leather goods, the rest of the business exceeded expectations, especially alcohol and select retail.

It can also be seen from the growth rate that the core leather goods business, which had slowed down in the third quarter of last year, has regained growth momentum. The selected retail business has returned to normal growth rates, jewelry growth has narrowed, cosmetics growth is similar to leather goods, and alcohol growth has turned positive after a large decline of 20.5% in the third quarter of last year, all of which have helped LV's fourth quarter exceed expectations.

By region, the US business organically grew by 8%, beating analysts' expectations of 1.89%; Japan's organic revenue growth was 20%, beating expectations of 14%; Europe's organic growth was 5%, in line with expectations; Asia (excluding Japan) organically grew by 15%, less than analysts' expectations of 19.8%:

As LV's main source of revenue, the United States contributed 28.6% of total revenue. Its stabilization and recovery has dispelled market pessimism about luxury goods, while China's recovery has been weaker than expected. However, due to the low base in the fourth quarter of 2022, growth rates are still acceptable.

Conditions in France and other regions of the world worsened in the fourth quarter, but offset by a lower revenue share and strong growth in Europe and Japan.

During the earnings call, management expressed confidence in 2024 and believed that positive growth would be achieved. This statement greatly boosted market confidence and pushed the stock price to its largest one-day increase in 15 years.

After the big increase, LV's PE ratio is 25 times, which is at a historical median. There is still some room for further upside, but analysts expect revenue growth of only 5.69% in 2024 compared to pre-pandemic years, which may limit LV's upside potential:

2024 should be a year when LV returns to normalcy after the impact of the pandemic. The highlight should be in 2025, which is worth looking forward to!