Jew­ellery the star

Finweek English Edition - - MARKET PLACE - Edi­to­rial@fin­

This week I also pick Richemont, which I’ve been bullish on since Oc­to­ber last year. Af­ter a tough 2016, Richemont re­ported bet­ter-than-ex­pected num­bers for the Christ­mas quar­ter, with growth driven by jew­ellery sales across most re­gions, as well as re­tail watch sales. It re­ported growth in Europe, Asia Pa­cific and the Amer­i­cas. How­ever, its whole­sale sales de­clined by 3% year-on-year in the quar­ter.

The group, which owns lux­ury brands like Cartier, Van Cleef & Ar­pels, Pi­aget, Chloé, Al­fred Dun­hill and Mont­blanc, earned the bulk of its sales from its jew­ellery busi­ness, which ac­counted for 56% of over­all sales, while Asia Pa­cific, with 36.5%, was the ge­o­graph­i­cal area with the big­gest con­tri­bu­tion to sales. Sales in this re­gion in­creased by 9%, re­flect­ing “strong per­for­mances in main­land China and Korea, mit­i­gated by con­tin­ued de­clines in Hong Kong and Ma­cau”, Richemont said.

Other busi­nesses also posted good growth, driven mainly by Chloé, Mont­blanc and Peter Mil­lar, the group said. Look­ing at the nine-month pe­riod to end De­cem­ber, sales de­clined by 7% at ac­tual ex­change rates. The group will an­nounce its re­sults for the year on 12 May. How to trade it: In Oc­to­ber last year I had rec­om­mended a long on Richemont at 9 080c/share – it had cor­rected from an overex­tended po­si­tion los­ing about 35% of its value from highs at 12 175c/share to a low at 7 845c/share. Last week it gapped up­wards on the un­ex­pected good news, and be­cause gaps are usu­ally closed I ex­pect a pull­back to 9 735c/share – be­fore Richemont re­sumes a sus­tain­able up­trend to­wards 11 315c/share. In­crease longs above that level as gains to 12 175c/share should then fol­low. At present, in­vestors should wait for the near-term cor­rec­tion be­fore go­ing long. There­after, any level above 9 080c/share or above 9 735c/ share would make a good buy­ing op­por­tu­nity with a rea­son­able stop-loss.

Asia Pa­cific with 36.5%, was the ge­o­graph­i­cal area with the big­gest con­tri­bu­tion to sales.

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