2025-06-12-花旗集团-LPP_SA（LPPP）_LPP_SA_（LPPP.WA）_2025年第一季度业绩远超预期_受强劲利润率推动（2025年空间_销售指引下调）_12页_267kb

LPP SA 1Q25 Results Summary

Core Content Overview

LPP SA (LPPP.WA) reported its first-quarter 2025 results, which exceeded expectations in terms of net profit and EBIT, but the company revised its 2025 sales and space growth guidance downward. The report includes financial performance highlights, valuation analysis, risk factors, and important disclosures.

Financial Performance Highlights

• Net Profit: ZL 334 million (+21% yoy), 33% above the analyst's estimate and 29% above the PAP consensus.
• Sales: ZL 4.95 billion (+15% yoy), in line with the PAP consensus but 2% below Citi's estimate.
• EBIT: ZL 464 million (+19% yoy), 21% above the street and 27% above Citi's estimate.
• EBITDA: ZL 938 million (+18% yoy), 7% above the PAP and 10% above Citi's estimate.
• Gross Margin: 54% (+1.9pp yoy), well above the expected 52%.
• SG&A Costs: Increased by ~20% yoy to 44% of sales, 4% below the expected level.
• Per sqm SG&A Costs: Down 2% yoy, indicating improved efficiency per store.

Sales and Space Growth Guidance

• 2025 Space Growth: Revised to 25-30% (down 10pp from previous guidance of 35-40%).
• 2025 Sales Guidance: Revised to ZL 23-24 billion (down 8% from previous guidance of ZL 25-26 billion).
• Store Openings: 1,100 Sinsay stores are planned for 2025 (down from 1,500 previously).
• Gross Margin Guidance: Expected to remain in the 53-54% range.
• SG&A Margin Guidance: Targeted at 41-42%.
• EBITDA Margin: Remains unchanged at 19-20%.
• Capex Guidance: ZL 3.1 billion (down from ZL 3.5 billion previously).

Key Drivers of Strong Performance

• Offline Sales: +20% yoy.
• E-commerce Sales: +25% yoy, with a strong performance in the previous quarter (+32% yoy).
• Sinsay Brand Sales: +31% yoy, contributing 56% of total sales (up from 49% in 1Q24).
• Reserved Brand Sales: +22% yoy.
• Foreign Sales: +25% yoy, with Poland contributing +18% yoy.
• LFL Sales: +4.3% yoy, an improvement from the previous quarter's +1.4% yoy.
• FX Impact: Favorable foreign exchange rates supported the gross margin improvement.

Valuation Analysis

• Target Price: ZL 20,972, based on a 18x 2025E PE multiple.
• Peer Comparison: This multiple is approximately 15% lower than the average for peers H&M and Inditex.
• Discount Reason: The 15% discount is attributed to the ongoing issues related to the disposal of the Russian business.

Key Risks

• Downside Risks:

  • Weaker-than-expected EBIT margins.
  • Slower-than-anticipated space expansion.
  • Weaker consumer demand.
  • Higher freight rates and delivery disruptions.
  • Strengthening US$.
  • Limited expansion opportunities in developed markets.
  • Brand saturation in current markets.
  • Changes in consumer patterns and buying power.
  • Currency risk (production costs in US$, rents in euros).
  • Regulatory changes affecting imports from China.
  • Increasing competition from Chinese online platforms.

• Upside Risks:

  • Stronger EBIT margins.
  • Faster space expansion.
  • Stronger consumer demand.
  • Lower freight costs and improved delivery.
  • Weakening US$.
  • Positive changes in consumer patterns and buying power.
  • Improved international agreements.
  • Reduced competition from Chinese online platforms.

Analyst Information

• Analyst: Rafal Wiatr, CFA
• Contact: +48-22-690-3757 | rafal.wiatr@citi.com
• Research Rating: Buy
• Expected Share Price Return: 45.4%
• Expected Dividend Yield: 4.2%
• Expected Total Return: 49.6%
• Market Cap: ZL 126.771 billion (US$7.229 billion)

Important Disclosures

• Conflicts of Interest: Citi Research and its affiliates may have financial interests in LPP SA.
• Market Maker: DMBH is a market maker for LPP SA and has received compensation for this role.
• Catalyst Watch: Citi Research may issue short-term price direction calls based on specific events.
• Investment Rating Definitions:
  • Buy: ETR of 15% or more for non-high-risk stocks, 25% or more for high-risk stocks.
  • Neutral: No clear ETR direction.
  • Sell: Negative ETR.
• Catalyst Watch/Short Term Views (STV):
  • These are not equivalent to fundamental equity ratings.
  • They may expire or be removed before the end of the period.
  • No View corresponds to Hold in the ratings distribution table.

Summary of Key Figures

Conclusion

LPP SA's 1Q25 results were significantly better than expected, driven by strong margins and robust sales growth. Despite this, the company has revised its 2025 guidance for both sales and space growth downward, which may be attributed to external factors such as FX volatility and the ongoing challenges of the Russian business disposal. The valuation suggests a potential target price based on a 18x 2025E PE multiple, which is lower than the average for its peers. Investors should be aware of the key risks and consider them alongside the company's fundamental performance when making investment decisions.