Citigroup: lowers PRADA (01913) target price to HK$41.6, rates as "neutral"

Citi released a research report stating that after PRADA (01913) announced its financial performance for the 2025 fiscal year, they updated their forecast model and included predictions for Versace, while also predicting sales performance for the first quarter of this year. Based on the updated SOTP and DCF valuation, Citi lowered PRADA's target price from HK$52 to HK$41.6 and rated it as "Neutral". The bank raised the group's sales forecasts for the next two years by 8% and 6% respectively, to reflect the high single-digit range contribution from Versace, but also lowered the organic growth assumptions from an initial 8% and 7% to 5% and 6%, and reduced the impact of exchange rate headwinds. However, due to a forecasted decrease in gross profit margin and an increase in operating expenses related to the integration with Versace, Citi lowered the EBIT forecasts for the group by 5% and 5% for the next two years. Citi forecasts that PRADA's organic group sales in the first quarter of this year will increase by 2% year-on-year, with retail sales up by 1% and wholesale sales up by 2%. The forecasted sales are expected to increase by 8% year-on-year to 1.45 billion euros. By brand, retail sales for Prada are expected to increase by 1%, while Miu Miu is expected to increase by 3%. In terms of organic retail sales by region, Europe is expected to decrease by 4%, America to increase by 14%, Asia-Pacific to increase by 6%, Japan to decrease by 1%, and the Middle East to decrease by 25%.