A group of international big names seem to be planning to "evacuate" Hong Kong.
On February 27, according to **, citing people familiar with the matter, after receiving a potential acquisition intention, the global luggage leader Samsonite (01910HK) is studying the possibility of privatization.
Some private equity firms are looking at taking Samsonite to buy and take it private before relisting at a higher valuation in other ** trading markets such as the United States, the person said.
Tradewinds (ID: tradewind01) asked Samsonite related sources for confirmation, but the other party refused to comment on the grounds that it was inconvenient to respond in the quiet period near the release of the earnings report.
Catalyzed by the privatization news, Samsonite (01910.)HK) closed up 13 on February 2776%, the market value rose nearly 5 billion Hong Kong dollars in one day, and the next day, Samsonite closed up 1 again51% to 26HK$85 shares.
Although you are a leader in the industry, Samsonite is not very "welcomed" in Hong Kong. At present, the rolling price-to-earnings ratio is only about 11 times, and the market capitalization is less than HK$40 billion.
From a fundamental point of view, with the rapid recovery of the global travel market after the epidemic, Samsonite, which sells bags, also benefits from this.
As of the first three quarters of 2023, Samsonite's revenue increased by 32% year-on-year64% to 27$3.4 billion, with 2021 and 22 successive SPAPK brand and Russian business, revenue has exceeded 26$7.7 billion.
Where will this money-absorbing suitcase go, the market is closely watching.
In recent years, it is not uncommon for fashion and luxury companies to seek privatization for re-listing or secondary listing.
In June 2023, the Italian luxury yacht manufacturer Ferretti Yachts (9638.)HK) was listed on Euronext Milan for a secondary timeHeavy luxury brand Prada (1913HK) also said it would consider returning to Milan for a secondary listing.
In July 2023, the French skincare brand L'occitane ("L'Occitane" 0973.)HK) also considered privatizing it and relisting it in Europe at a higher valuation, but ultimately failed to do so. Recently, there has been news that the private equity firm Blackstone Group is interested in participating in the bid for L'Occitane.
Coincidentally, Samsonite, which landed on the Hong Kong stock market from 2010 to 11 with Prada and L'Occitane, will also be reported to be listed in the United States for a second time in 2023.
But at that time, Samsonite CEO Kyle Francis Gendreau said that there were no plans for a secondary listing, but "it will continue to evaluate". He also revealed that Samsonite has a broad investor base, with European and American investors accounting for more than half.
In January this year, Morgan Stanley quoted Samsonite management as saying in a report that Samsonite plans to conduct a secondary listing in the middle of this year.
On February 27, news broke again about Samsonite's privatization: some private equity firms are studying the acquisition of Samsonite to take it private, and then re-list it at a higher valuation in other ** trading markets such as the United States.
It's no surprise that external consortia are demanding higher valuations from Samsonite. From the perspective of equity structure, Samsonite, which has no actual controller, is indeed the top three shareholders of private equity institutions and banks.
As of the 2023 interim report, its top three shareholders are Schroders Group, JPMorgan Chase and Bank of New York Mellon, each holding shares. 59% and 535%, all of which are large financial groups with strong assets, and Samsonite's current chairman of the board of directors, Timothy Charles Parker, holds 408%, which is the largest individual shareholder.
Judging from the position data, Samsonite is not very popular with Chinese investors.
Wind data shows that foreign banks HSBC, Citibank, JPMorgan Chase, BNP Paribas** and Standard Chartered Bank currently account for the top five market capitalization of Samsonite's holdings, with HSBC accounting for 4718% share.
The Hong Kong Stock Connect for mainland investors can only rank 6th, accounting for 3% of the total market capitalization16%。
From the perspective of valuation level, a private equity person in East China told Trade Winds (ID: tradewind01) that in his opinion, Samsonite's rolling P/E ratio of less than 11 times is slightly lower than the average valuation level of 15-20 times for consumer discretionary products.
To a certain extent, the stock price trend can reflect the market position of the listed company, and companies that are not satisfied with the market price may choose to privatize and delist.
For example, in July 2023, Dali Foods (3799., the parent company of CobikHK) has been at a low level for a long time, and its market value has halved compared with the HK$100 billion at its peak. In the end, Dali Foods chose privatization and delisting to end its status as a listed company.
Looking at L'Occitane, which pushed ahead with the privatization process in July last year, its market capitalization was only HK$27 billion from its peak of HK$50 billionSamsonite, which came out with the news of privatization, has a market value of more than HK$30 billion compared to its peak of more than HK$50 billion.
The pursuit of higher market pricing is also the fundamental reason for the frequent privatization of Hong Kong stocks.
Before Samsonite decides whether to pack up and start the privatization process, the outside world can still get a glimpse of the performance of the world's leading luggage company from its financial reports.
According to Euromonitor International data, Samsonite is the leader in luggage, and in 2018, its market share was as high as 194%, and the market share fell to a low of 13 in 20209%, and then gradually recovered to 15 in '229%
Samsonite's business and Nike, Anta Sports (2020.)HK) and other sports shoes and apparel businesses are quite similar, that is, they all regard functionality as the core selling point, and in terms of actual operation, they all operate through epitaxial mergers and acquisitions and multi-brand operations to cut into more market segments.
In 1941, when the Samsonite brand was founded, founder Schweed, in order to express how strong and durable his products were, referred to his bags as the heroes of the Bible"samsons", which was later known as the "Samsonite" brand.
And to highlight the tenacity of the Samsonite brand, in 2011, in a Samsonite commercial, its products were not harmed even if they were hit by a car.
This is mainly due to Samsonite's original curv thermoplastic composite cabinet material, which not only resists severe impacts, but is also lighter at the same size.
Similar to Anta's successive acquisitions of brands such as FILA, based on the core brand Samsonite, Samsonite has made frequent mergers and acquisitions since its listing on the Hong Kong Stock Exchange in 2011, acquiring six luggage brands.
For example, in 2012, it acquired the affordable luggage brand High Sierra to supplement the outdoor product systemIn 2014, in order to further expand the female market, Samsonite acquired the French fashion luggage brand Lipault;In 2016, it acquired TUMI, a leading American business travel luggage company, at a premium of 33% to open up the high-end affordable luxury market.
In 2022, Samsonite's own brand Samsonite accounted for 50% of its revenue, while TUMI acquired in 2016 accounted for 23%, and American Tourister, which was acquired in 1933 to focus on the low-end market, accounted for 18% of its revenue.
However, frequent highly leveraged buyouts have led to a surge in Samsonite's goodwill and liabilities. Its goodwill increased from 2$100 million increased to $8 in the first three quarters of 2022US$2.2 billion, and the debt-to-asset ratio also increased from 40.0 in 20121% increased to 77 in 202213%。
Or in order to cope with debt pressure, Samsonite has "reduced costs and increased efficiency" significantly in recent years. In 2022, its sales expense ratio decreased by 5 percentage points compared with 2019 to 33%, and its administrative expense ratio decreased by 518 percentage points to 77%。
As Samsonite's travel-related products contribute nearly 70% of its revenue, its performance is closely related to the travel market. As the impact of the epidemic subsides, Samsonite's performance is continuing to recover.
In the third quarter of 2023, Samsonite's revenue increased by 21% year-on-year09% to 9$5.8 billion, up 364；Net profit increased by 98% year-on-year28% to 1$1.5 billion, a significant increase of 4663%。
In terms of markets, with the recovery of the Chinese market in 2023, the Asian market will overtake the North American market to become Samsonite's largest market, and the Chinese mainland market is Samsonite's second largest market after the US market.
For Samsonite, whose performance has recovered significantly, seeking a higher valuation in the secondary market is also in line with the legitimate demands of many of its institutional major shareholders.
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