Oddo BHF reports in today's research that the slowdown in China described in March is confirmed, and that growth in Asia could remain below the Group's average for the rest of 2024.

Oddo BHF confirms its neutral opinion on the stock, but lowers its price target to E2,195 (from E2,291).

' This slowdown has been confirmed and should be reflected in the Group's activity in Q2, with the Asia-Pacific region experiencing slower growth.

The slowdown in China is affecting Silks & Textiles, Ready-to-Wear & Accessories and Watches more severely, while the categories comprising the most expensive products (Leather Goods and, to a certain extent, Other Crafts, which includes Tableware and Jewelry) are unsurprisingly more resilient," says the analyst.

The analyst has lowered his growth forecast for the Asia-Pacific region from 10% to 5% for the 2nd quarter, and does not expect any visible improvement in the 3rd quarter, which means that growth for 2024 as a whole in the region is now expected to be below 10%, at 8.5% (it was +14% in the 1st quarter).

Group sales growth is therefore lowered from 12.2% to 10.2% in Q2, and from 13.6% to 12.4% for 2024 as a whole.

With regard to profitability, we have lowered our H1 EBIT margin forecast from 42.4% to 41.5% (gross margin y/y down -120 bp)," says Oddo BHF.

' All in all, the downward revision to our sales estimates
and EBIT does not exceed 1%, but our previous EBIT forecasts were more than 5% below the recent Visible Alpha consensus '.

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