Editing LVMH Moët Hennessy - Louis Vuitton, Société Européenne
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==== Revenue by business group ==== | ==== Revenue by business group ==== | ||
[[File:Capture4.png|thumb|Revenue by business group, as a % of total revenue.|left]] | |||
==== Revenue by geographic region delivery ==== | ==== Revenue by geographic region delivery ==== | ||
[[File:Revenue by region.png|Revenue by geographic region of delivery, in %]] | |||
[[File:Revenue by region.png|thumb|Revenue by geographic region of delivery, in %|left]] | |||
== Financial Statements<ref>lvmh_2022_annual-report.pdf (lvmh-static.com)</ref> == | == Financial Statements<ref>lvmh_2022_annual-report.pdf (lvmh-static.com)</ref> == | ||
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|'''26,720''' | |'''26,720''' | ||
|} | |} | ||
[[File:LVMH Annual Income Statement.png|left|thumb|465x465px]] | |||
=== LVMH's Annual Balance Sheet === | === LVMH's Annual Balance Sheet === | ||
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|'''35,147''' | |'''35,147''' | ||
|} | |} | ||
[[File:LVMH Balance Sheet.png|left|thumb|443x443px]] | |||
=== LVMH's Cash Flow Statement === | === LVMH's Cash Flow Statement === | ||
{| class="wikitable" | {| class="wikitable" | ||
!'''EUR''' €, Millions | !'''EUR''' €, Millions | ||
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|'''10,113''' | |'''10,113''' | ||
|} | |} | ||
[[File:Cash Flow Statement.png|left|thumb|365x365px|Cash Flow Summary]] | |||
=== Financial Forecast === | === Financial Forecast === | ||
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| +/- | | +/- | ||
|} | |} | ||
== Valuation == | == Valuation == | ||
[[File:Capture10.png|left|thumb|600x600px|Unlevered Free Cash Flow]] | |||
[[File: | [[File:Capture11.png|left|thumb|600x600px|Fixed Assets]] | ||
[[File: | [[File:Capture12.png|left|thumb|600x600px|Net Working Capital]] | ||
[[File: | [[File:Capture13.png|left|thumb|450x450px|Weighted Average Cost of Capital (WACC)]] | ||
[[File: | [[File:Capture14.png|left|thumb|600x600px|Implied Share Price and Sensitivity Table]] | ||
[[File: | [[File:Capture15.png|left|thumb|600x600px|Base Case, Bear Case, Bull Case]] | ||
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. | 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. | ||
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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. | 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. | 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 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. | 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. |