Morgan Stanley: Samsonite sales have turned to positive growth, target price of 24 yuan, urging "buy more"

Morgan Stanley's research report indicates that Samsonite (01910.HK) has shifted to positive sales growth from August to October. In October, U.S. airline passenger traffic rose by approximately 4%, marking the highest increase this year, supporting management's optimistic outlook for the fourth quarter, despite a high wholesale business base in the fourth quarter of last year.

Management expects to achieve good profitability in the fourth quarter, with optimized layouts for online and offline direct-to-consumer (DTC) channels effectively capturing demand and likely alleviating supply-demand pressure; the firm also anticipates that the Asian market and the Tumi brand will drive gross margin improvement. Additionally, the strong gross margin performance in the third quarter reflects improvements in the group's supply chain and product management, enhanced brand value, and manageable competitive dynamics, despite weak demand and tariff impacts.

The firm states that Samsonite's performance downturn cycle will begin in the second to third quarter of 2024, when global demand is impacted by inflation and the decline of the travel boom; the third quarter of this year may mark the starting point of a new cycle. A target price of 24 HKD and an "Overweight" rating are now given