Background and overview of Richemont
Compagnie Financiere Richemont SA ("CFR") is a Swiss luxury goods group managed with a view to the long-term development of successful international brands. CFR owns several of the world's leading companies in the field of luxury goods, with particular strengths in jewellery, luxury watches and writing instruments. Some of CFR's brands include:
Cartier,
Van Cleef & Arpels,
Piaget,
Vacheron Constantin,
Jaeger-LeCoultre,
IWC Schaffhausen,
Panerai
and Montblanc.
CFR is one of the largest shares listed on the JSE and is run by one of the most influential families in South Africa. The Rupert family.
Cartier,
Van Cleef & Arpels,
Piaget,
Vacheron Constantin,
Jaeger-LeCoultre,
IWC Schaffhausen,
Panerai
and Montblanc.
CFR is one of the largest shares listed on the JSE and is run by one of the most influential families in South Africa. The Rupert family.
Scroll over or click on the funnel chart to get more details of CFRs latest financial results (Note figures reported are in Euro's)
Financial review:
CFR has large exposure in some of the richest countries in the world (USA, Japan, large parts of Europe). The brands they own and the products they sell are not cheap. They cater for the rich. And in some cases the super rich. This does shield them somewhat when it comes to market fluctuations. As rich people feel recessions and market slow days less than the average person. The map below shows some of the regions they have exposure to and the contributions these regions make to their overall sales. Japan which is a big market is highlighted separate when scrolled over Asia Pacific region.
With CFR reporting their results in Rand's in SA, continued Rand weakness does bode well for locally listed CFR shares. As the exchange rate movements could lead to large increases in reported Rand earnings from CFR. Even if sales do not increase at all, strong exchange rate movements alone could lead to significant revenue and profit gains for CFR in Rand terms. The move to more online sales with Net-a-porter seems to be a good one as more and more goods and services are bought online. At the current levels CFR is trading at a PE of around 30. But a 20% depreciation in the Rand (assuming no profit/sales growth) alone could cut the PE from around 30 to 24. And with the quality of their brands a forward PE of around 24 is not that demanding. CFR is highly cash generative, has an extremely solid balance sheet, strong brands and entering the online retail goods market. They are also well spread in terms of geographical locations in order to take advantage of high growth regions.
Valuation:
Based on CFR's current financials, its brands/masons, the markets and regions they operate in, and their strong cash position and cash generation capabilities and good Rand hedge earnings we value CFR at between R94.10 and R96.80
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question.