Editing LVMH Moët Hennessy - Louis Vuitton, Société Européenne

=== Total Addressable Market ===

== Financial Highlights <ref name=":2" /> ==

==== Revenue by business group ====

==== Revenue by geographic region delivery ====

== Financial Statements<ref>lvmh_2022_annual-report.pdf (lvmh-static.com)</ref> ==

|'''26,720'''

|}

=== LVMH's Annual Balance Sheet ===

|'''35,147'''

|}

=== LVMH's Cash Flow Statement ===

{| class="wikitable"

!'''EUR''' €,  Millions

|'''10,113'''

|}

=== Financial Forecast ===

| +/-

|}

== Valuation ==

When estimating the expected return on an investment over a period of 12-months or more, the most accurate approach is a DCF. In the following section, there are 2 valuation methods, the DCF model and the relative valuation, both models are used in the report for completeness.   

A simple 50% base case, 25% bull case, and bear case are used because of the uncertainty of the decision of the FOMC on the terminal interest rate. The new reported number on the CPI, consumer price index, has back down to 3% whereas the previous number is 4%. If the FOMC, federal open market committee, does not decrease the interest rate in around September or November, the market will likely be looking at deflation instead. Although the non-Farm payroll has a strong number and a low unemployment rate, the participation rate is much lower than the average, which indicates that the unemployment is not accurately reflected. According to the backtesting research, whenever the FOMC decreases the interest rate, the transition from hawkish to dovish sentiment, resulting in a short squeeze of the stock market and then a big fall, the target is likely to be reached in the next few months when the interest rate is not likely to be increased. A dovish sentiment is an interest rate policy that is more accommodative to stimulate spending in an economy, which is clearly good for the luxury good market.

The risk-free rate takes the US 10-year treasury bond yield rate. The Beta value takes the 5 Year monthly, which has a value of 1.03 which suggests that LVMH moves with more momentum than the S&P 500 stocks. This beta suggests that it’s not a very risky investment as it doesn’t deviate a lot from the market beta of 1. Although theoretically it does increase a portfolios risk by 3% and may increase the expected return.

Looking at the numbers in the DCF model, for the base case, we assumed a constant percentage increase. The China PPI (producer price index ) number is lower than expected, falling by 5.4 percent in June from the previous year, marking the steepest fall since December 2015. Despite the issue remaining from 2022, the revenue and profit numbers remain strong in the Chinese Market in LVMH. When this situation is relieved, the buying power is likely to be released and the consumer discretionary industry is more likely to be getting the attention. The number is likely to be higher than the prediction from using the constant percentage increase.

For the Bear case, the free cash flow to equity has a slight decrease from 2021 to 2022. Although the number remains much higher than in 2020, if the situation persists, the prediction from using the combined result from the free cash flow to equity and Net Debt to EBITDA is likely to be lower.  The free cash flow to equity has just turned positive from 2021, More data from 2023 is needed to check if the trends remain. Furthermore, the Japanese yield curve policy might change on the 28th of July. The Japanese currency Yen is usually borrowed and bought stocks in other markets, such as the US market. The cost would therefore be higher, the target return requires higher expectations on the trade and the market power is likely to be suppressed.

For the Bull case, LVMH and Google announced a strategic partnership to accelerate innovation and develop new cloud-based artificial intelligence (AI) solutions in 2021. This creates new, personalized customer experiences that foster long-term growth. LVMH will be able to take actions to improve the overall business efficiency, from customer experience personalization to product development and logistics, on top of the current machine learning trend. Therefore, the earning number increased by 23%, taking the change from 2021 to 2022.

== Competitors Comparison ==

'''LVMH Overview''': In 2023, LVMH reported a Q1 FY 2023 revenue of 21 billion euros, showing a significant increase of 17% compared to the same period in 2022. LVMH's strength lies in its high level of customer loyalty and diverse portfolio of 75 prestigious brands across various luxury sectors.

1. Richemont could be a big competitor: Based on the revenue data and performance analysis, LVMH remains the market leader in the luxury industry. However, it faces major challenges from Richemont, each with its own strengths and weaknesses. LVMH should focus on expanding its presence in the jewellery industry to compete more effectively with Richemont. Besides, The decision of Richemont to reject the acquisition proposal from LVMH could potentially impact Richemont's stock and attract more attention, particularly from investors who value the "more boutique in core business" mindset.

Overall, LVMH's performance is expected to continue to increase, and there is optimism regarding its total revenue for 2023.