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T O D ’ S S PA

VALUATION ■ Tod’s is currently trading at the lower end of its wider peer group both in EV/EBITDA and EV/Sales, as

its recent business performance has been poor. However, we believe those company specific issues can be fixed in a reasonable and timely fashion by a motivated 60.6% owner.

■ Based on Forecast EBITDA of €158M for FY2018 and applying a multiple of 14.9x (10% discount to the

current peer group average multiple of 16.6x), we derived an Intrinsic Value Estimate of €71.58, with an upside potential of +24.5%.

■ To cross-check this valuation, we utilise EV/Sales (a useful metric to compare companies in the sector

as earnings are compressed by years of underperformance). Based on Forecast Revenue of €957.7M for FY2018 and applying the current peer group average multiple of 3.1x to this we derived an Intrinsic Value Estimate of €89.96, with an upside potential of +56.5%. This number exceeds our EV/EBITDA valuation of €71.58 by 25.7%, which indicates Tod’s key issue/problem is its declining and below-average margins that needs to be resolved before the market will re-rate the stock.

■ We also believe that Tod’s is a potential takeover target. Therefore, investors need to consider what multiple a potential acquirer would have to pay so that Diego Della Valle may say yes?

EV/SALES TTM

EV/EBITDA TTM Mulberry Group PLC

Hermes International SCA

Hermes International SCA Moncler SpA Moncler SpA Brunello Cucinelli SpA Brunello Cucinelli SpA Mulberry Group PLC Kering SA Kering SA Prada SpA Compagnie Financiere Richemont SA LVMH Moet Hennessy Vuitton SE LVMH Moet Hennessy Louis VuittonLouis SE Compagnie SalvatoreFinanciere Ferragamo SpA Richemont SA The Swatch Group AG The Swatch Group AG Group PLC Jimmy Burberry Choo PLC Prada SpA Salvatore Ferragamo SpA Ted Baker PLC Mulberry Group PLC Burberry Group PLC Tapestry Inc Coach Inc Michael Kors Holdings Ltd Tod's SpA Hugo Boss AG Hugo Boss AG Ted Baker PLC Michael Kors Holdings Ltd Tod's SpA Geox SpA Ralph Lauren Corp Ralph Lauren Corp Geox SpA 0

1

Brunello Cucinelli SpA Hermes International SCA Moncler SpA Moncler SpA Mulberry Group PLC Kering SA Prada SpA Jimmy Choo PLC Kering SA The Swatch Group AG The Swatch Group AG Compagnie Financiere Richemont SA Salvatore Ferragamo SpA Ted Baker PLC LVMH Moet Hennessy Louis VuittonLouis SE LVMH Moet Hennessy Vuitton SE SalvatoreFinanciere Ferragamo SpA Richemont SA Compagnie Geox SpA Burberry Group PLC Prada SpA Tapestry Inc Tod's SpATed Baker PLC Burberry Group PLC Tod's SpA Hugo Boss AG Hugo Boss AG Coach Inc Ralph Lauren Corp Ralph Lauren Corp Michael Kors Holdings Ltd Michael Kors Holdings Ltd Geox SpA Brunello Cucinelli SpA

Hermes International SCA

2

0.0

3

2.0

4

5

4.0

6

6.0

7

8

8.0

9

10.0

0

12.0

5

10

0.0

15

5.0

20

10.0

15.0

25

20.0

30

25.0

EV/EBITDA NTM Mulberry Group PLC BrunelloHermes Cucinelli SpAInternational

SCA

Hermes International SCA Brunello Cucinelli SpA Moncler SpA

Mulberry Group PLC Moncler SpA Prada SpA The Swatch Group AG Salvatore Ferragamo SpA Salvatore Ferragamo SpA Kering SA Compagnie Financiere Richemont SA Burberry Group PLC LVMH Moet Hennessy Louis Vuitton SE LVMH Moet Hennessy Louis Vuitton SE Tod's SpA The Swatch Group AG Ted Baker PLC Compagnie Financiere Richemont SA Prada SpA Tod's SpA Burberry Group PLC Ted Baker PLC Hugo Boss AG Hugo Boss AG Geox SpA Ralph Lauren Corp Michael Kors Holdings Ltd Tapestry Inc Coach Inc Michael Kors Holdings Ltd Ralph Lauren Corp Geox SpA Kering SA

Jimmy Choo PLC

0

5

10

0.0

15

5.0

20

10.0

25

15.0

20.0

30

25.0

35

30.0

Data Source: Thomson Reuters Eikon as at 7 June 2018. EV/EBITDA NTM forecasts are based on analysts’ consensus forecast EBITDA collected by Thomson Reuters.

407

35

30.0

Profile for Richard

Elevation Capital Research Annual 2018  

Elevation Capital Research Annual 2018