Nomura lifted its target price for Samsonite International S.A. (01910) to HK$16 from HK$15.5 but downgraded its rating to "reduce" from "neutral".
The research house expects Samsonite's US luggage sales to remain lackluster, given two rounds of price hikes by 12% overall that aim to offset a total tariff hike of 25% (US tariff on Chinese goods).
Chinese tourist inflow to the US is likely to remain weak owing to a strong USD; a shorter holiday season due to Black Friday being delayed by a week should also contribute to the sequential deterioration.
Nomura expects eBags and Speck (which together account for 20% of North America sales) to weigh on US sales in 4Q, with overall North America sales growth deteriorating to -10% from -8% in 3Q.
Nomura lowered its FY2019-21 reported earnings forecasts by 11-15% to reflect lower sales growth and GPM assumptions.
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