Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
As we mentioned yesterday 4Q results come after US close tonight - consensus figures at bottom. We are not too worried - despite Estee Lauder missing on China and US weakness. Coty is light in China and and L'Oréal did report growth in other regions for beauty. Consensus is not looking for growth to diverge between prestige brands ($20-$450 px range) and consumer ($5-$20). We are looking for guidance on trading conditions between two. As we have seen performance in lux has been divergent by brands - Coty is well diversified on that with ownership and long-term licenses covering ~20 brands.
Bulk of its move into IG will come on continued and planned divestiture of stake in Wella - a hair products co - which it expects to complete by end of CY25. Any changes to timeline or the valuation of the stake (25.8% at $1.08b in Q3) are credit movers.
The new 3NC2 were a strong cheap view of ours in primary pricing with 20bp NIC that has been well and truly traded away since (-60bps on yield). We also like Coty on any decompression moves (like earlier this month) but unfortunately we hear offer side tough to find. Issuance again seems unlikely with planned gross deleveraging and no maturities till 2026.
It's tough to find BB retailers doing well among € issuers. We are eyeing Samsonite when it (hopefully) refinances its 26s as next opportunity for some value in primary. We don't expect a revisit from Dufry/Avolta this year either.
Consensus
- 4Q: revenue $1.4b, LFL growth just shy of 5% across all regions, gross margin at 63.5%, adj. EBITDA of $167m at a 12% margin. Prestige expected to grow 5.4%, consumer beauty 3.9%.
- Equities will be more interested in trading conditions since June and any FY25 guidance. Consensus is still looking for ~above market growth; LFL +6%, EBITDA margin expansion of 30bps to 17.8%.
- Stock has sold-off into it, looks to have cheapened on forward multiples too.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.