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Director’s Cut
Brilliance a litmus test for luxury
While French President Nicolas Sarkozy plans to increase taxes for the richest
people in France, we don’t think the luxury goods sector will be too concerned.
Euromonitor expects luxury goods to be the fastest growing consumer segment
in coming years, rising at a 25% annual clip. This may seem high when global
markets are increasingly concerned about slowing developed world growth. But
as we have highlighted many times, the real engine of demand in luxury goods is
the aspirational consumption in Asian countries, particularly China.
You can see this theme in the latest Swiss watch exports. Overall, the market
was up 21%, but Hong Kong and China outpaced with growth of 55% and 46%,
respectively. Luxury was also the best performing segment with 27% growth by
value compared to only 4% growth in the entry level segment. Vincent Hammel
sees these numbers as supporting his Outperform on Swatch (UHR VX). Given
the ongoing strength in aspirational consumption we would also be buyers of
Compagnie Fin Richemont (CFR VX) and PPR (PP FP).
The latest results of Brilliance China Automotive (1114 HK, not rated) are yet
another data point supporting our view. In the first half, China’s car sales rose
3%, while the luxury segment increased 30%, and Brilliance’s sales of BMW
sedans rose by 69%! With the brand gaining share in an already high growth
market, Christian Breitsprecher recommends to buy BMW (BMW GR).
Highlights
Jon Groberg continues to rate Thermo Fisher (TMO US) as one of his top
picks in the US following the closure of the Phadia acquisition.
Guy Peddy has assessed the European telecoms and concluded that
Deutsche Telecom (DTE GR) has the sector’s best funding position.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Director’s Cut
Brilliance a litmus test for luxury
While French President Nicolas Sarkozy plans to increase taxes for the richest
people in France, we don’t think the luxury goods sector will be too concerned.
Euromonitor expects luxury goods to be the fastest growing consumer segment
in coming years, rising at a 25% annual clip. This may seem high when global
markets are increasingly concerned about slowing developed world growth. But
as we have highlighted many times, the real engine of demand in luxury goods is
the aspirational consumption in Asian countries, particularly China.
You can see this theme in the latest Swiss watch exports. Overall, the market
was up 21%, but Hong Kong and China outpaced with growth of 55% and 46%,
respectively. Luxury was also the best performing segment with 27% growth by
value compared to only 4% growth in the entry level segment. Vincent Hammel
sees these numbers as supporting his Outperform on Swatch (UHR VX). Given
the ongoing strength in aspirational consumption we would also be buyers of
Compagnie Fin Richemont (CFR VX) and PPR (PP FP).
The latest results of Brilliance China Automotive (1114 HK, not rated) are yet
another data point supporting our view. In the first half, China’s car sales rose
3%, while the luxury segment increased 30%, and Brilliance’s sales of BMW
sedans rose by 69%! With the brand gaining share in an already high growth
market, Christian Breitsprecher recommends to buy BMW (BMW GR).
Highlights
Jon Groberg continues to rate Thermo Fisher (TMO US) as one of his top
picks in the US following the closure of the Phadia acquisition.
Guy Peddy has assessed the European telecoms and concluded that
Deutsche Telecom (DTE GR) has the sector’s best funding position.
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