In "The Big Banks," Citigroup gives Prada a rating of "Outperform," and management believes that the worst period in mainland China has passed

Citi published a research report indicating that Prada (01913.HK) retail sales in the third quarter of this year roughly met market expectations, with a year-on-year growth of 7.6% at constant exchange rates; retail sales for the Prada and Miu Miu brands also largely met market expectations, with a year-on-year decrease of 0.8% and an increase of 29%, respectively. Looking at the two-year combined performance, both brands showed steady quarterly results, including a year-on-year growth of 1% and 1% for the core Prada brand in the second and third quarters of this year, respectively; Miu Miu saw year-on-year growth of 136% and 134%, respectively.

Citi stated that for the core Prada brand, although the Chinese market is still experiencing negative growth, there has been a quarter-on-quarter improvement in the third quarter. The Americas, Europe, and Japan markets all achieved positive growth, showing quarter-on-quarter improvement driven by strong local demand and slightly improved tourism demand. Prada's management believes that the worst period in China has passed. Looking ahead, sales have continued to improve since October, but management pointed out that the fourth quarter presents a challenging base, and the last six weeks will be crucial.

Citi maintains a target price of HKD 50 for Prada and an "Outperform" rating, as Prada continues to expand its market share, but its valuation is low at 26 times enterprise value/EBITDA, compared to a 53% discount relative to the industry average