CICC has released a research report stating it largely maintains its revenue forecasts for SAMSONITE (01910) for 2026 and 2027. However, due to greater-than-expected pressure on production and operating costs against the backdrop of Middle East conflicts and weak consumer sentiment, the firm has lowered its net profit forecasts for 2026 and 2027 by 20% and 9%, respectively. The Outperform industry rating is maintained, but the target price has been reduced by 17% to HKD 20, based on a 14x 2026 price-to-earnings ratio, implying 46% upside potential. The current share price corresponds to 2026 and 2027 P/E ratios of 9.9x and 8.3x, respectively.

CICC's key views are as follows:

1Q26 Results Missed Market Consensus SAMSONITE reported 1Q26 results: net sales of USD 829 million, representing a year-on-year increase of 0.4% at constant exchange rates (CER). Excluding the impact from the Middle East and India, growth would have been 1.6%. Adjusted EBITDA was USD 109 million, with a margin of 13.1%, compared to 16.0% in the same period last year. Adjusted net profit was USD 36.5 million, down from USD 52.0 million a year ago. The results fell short of market expectations due to higher-than-anticipated cost pressures from increased production and operating expenses.

Sales Outlook: The company expects 2Q26 sales growth to be similar to 1Q26, ranging from flat to low single-digit growth year-on-year at CER. Assuming no further escalation of the Middle East conflict, full-year 2026 sales are projected to grow at a low single-digit rate. The bank believes that the sequential improvement compared to 2025 could be impacted by the Middle East conflict, which accounts for approximately 1.8% of total sales.

Margin Outlook: Management anticipates the gross profit margin to stabilize around 59%, supported by regional mix, brand strength, and ongoing tariff relief measures. However, this is expected to be offset by factors such as rising plastic prices, which constitute about 25% of material costs, along with aluminum prices, freight costs, and other inflationary pressures.

Dual-Listing Process: The company indicated it is completing preparations for a potential dual primary listing in the United States and maintains its target to complete this dual listing in 2026.

Risk factors include macroeconomic pressure, asset impairment losses, intensifying external competition, increased internal competition among company brands, foreign exchange volatility, uncertainty regarding the timing of the secondary listing, and the impact of geopolitical conflicts.