PRDSY - Prada: Ending Markdowns And Rationalizing Wholesale Is Positive But Does Not Justify Premium Valuation

Elevator Pitch

Hong Kong-listed Prada S.p.A. (OTCPK:PRDSY) (OTCPK:PRDSF) [1913:HK] is trading at a premium to listed peers at 28.2 times consensus forward FY2020 P/E based on its share price of HK$24.85 as of August 6, 2019.

While I am positive on the company's actions taken to end seasonal markdowns and rationalize the wholesale channel in the mid-to-long terms, these actions will have a negative impact on the company's financials in 2H2019. Also, it is difficult to justify Prada's valuation premium, taking into the account the fact that other luxury bands have