HSBC: PRADA's sales growth in the second half of the year slightly slows down, target price lowered to 66 yuan, maintaining a "Buy" rating

HSBC Global Research report indicates that luxury brand Prada (01913.HK) significantly outperformed its peers in sales growth in the first quarter of this year, and it is expected that this advantage will continue into the second quarter, potentially allowing the group to improve its operating profit margin this year. However, considering a slight slowdown in sales growth in the second half of 2025 and 2026, the target price has been lowered from HKD 68 to HKD 66; taking into account the brand's 38% potential upside, the "Buy" rating is maintained.

The report states that as Prada's competitors experience numerous changes in management and some core brands undergo changes in creative directors, Prada should continue to benefit from product lines, cultural relevance, and significantly improved retail experiences and events. Regarding the recent popularity of MiuMiu, HSBC believes its explosive growth is unlikely to be a flash in the pan, as the brand should catch up in terms of space expansion after its explosive growth in existing spaces.

HSBC expects MiuMiu's sales in 2025, calculated at constant exchange rates, to grow by nearly one-third and to surpass EUR 2 billion next year. Meanwhile, Prada brand sales may see a slight decline this year (down 1% at constant exchange rates), but considering the current state of the soft luxury goods market, including fashion and handbags, it still indicates significant market share growth. After retail sales grew by approximately 13% at constant exchange rates in the first quarter, HSBC believes that Prada Group may again approach double-digit growth levels in the second quarter ending in June this year (retail growth of 10%, overall group growth of 9%).

HSBC believes that compared to peers and growth potential, Prada stock offers particularly good value