"Big Banks" UBS: Expects the market to have a positive reaction to Samsonite's sales growth outlook for the fourth quarter and confidence in maintaining profit margins

According to a report by UBS, Samsonite (01910.HK) reported a year-on-year adjusted EBITDA decline of 8% to USD 143 million in the third quarter, in line with the bank's expectation of USD 139 million, with an EBITDA margin of 16.3%, compared to the bank's forecast of 16.1%. Net sales growth has significantly slowed, with a year-on-year decline of 1% at constant exchange rates, narrowing from a year-on-year decline of 6% in the second quarter, partly benefiting from a low base.

The bank noted that management stated that positive revenue momentum continued into October and expected further improvement in fourth-quarter net sales growth against a high base, with a stable gross margin of 59.6%, benefiting from a product mix shift towards Tumi and direct sales channels, as well as effective measures to mitigate the impact of U.S. tariffs. Management intends to complete a dual listing next year in response to market conditions. The bank anticipates that the market will react positively to the company's fourth-quarter sales growth outlook exceeding expectations, as well as management's confidence in maintaining profitability.

The bank also mentioned that Samsonite is trading at a forecasted price-to-earnings ratio of 10.2 times, which is still 1.3 standard deviations below its historical average. The bank is currently reviewing its investment rating and target price for Samsonite, previously rated as "Neutral" with a target price of HKD 17.4