CICC has released a research report stating that given Samsonite's (01910) weaker-than-expected sales momentum and unfavorable operating leverage, the firm has lowered its 2025 and 2026 revenue forecasts by 3% to US$3.42 billion and US$3.65 billion respectively. The firm has also reduced its net profit forecasts for 2025 and 2026 by 17% and 9% to US$271 million and US$316 million respectively. Considering the company's solid market-leading position, CICC maintains its outperform rating and target price of HK$20 (valuation switch to 12x 2026 P/E, corresponding to 14x 2025 P/E), which represents 21% upside potential from the current share price. The current share price corresponds to 11.4x 2025 P/E and 9.8x 2026 P/E.

CICC's main observations are as follows:

**Q2 FY25 Results Below Expectations**

Samsonite announced Q2 FY25 results: net sales of US$865 million, down 5.8% year-on-year at constant currency; adjusted EBITDA of US$141 million (EBITDA margin of 16.3% versus 19.0% in the same period last year); adjusted net income of US$71.4 million (compared to US$86.9 million in the same period last year). The company's performance was below the firm's expectations, primarily due to weaker-than-expected performance in Asia and North America.

During the earnings conference call, management highlighted: 1) The company experienced significant sales growth during the post-pandemic travel recovery period from 2021 to 2023, with a compound sales growth rate of 37%, significantly higher than the industry's average annual growth rate of 4.5%. The company's sales performance in 2024-2025 is returning to normalization. Global passenger travel is expected to grow at approximately 4% annually from 2024 to 2029, and management expects the company to benefit from long-term travel demand growth. 2) Sales outlook: The company's performance in Q3 FY25 to date is similar to Q2 FY25, corresponding to low single-digit sales decline. Driven by base effects, improved consumer sentiment, and clarity on US tariff prospects, management expects the company's sales in the second half of this year to improve slightly compared to the first half. Non-travel category penetration has increased (accounting for 36.2% of sales versus 34.4% in the same period last year). Lifestyle and outdoor brand Gregory (accounting for less than 3% of sales) achieved 14.7% year-on-year sales growth at constant currency in the first half of this year. 3) Margin outlook: Affected by US tariffs, the firm expects the company's gross margin to be between 59-59.5% in 2025, but the company is taking corresponding measures to offset this impact. The US has confirmed a 20% tariff on imported products from major production countries (Indonesia, Thailand, Cambodia, Vietnam). The company plans to utilize inventory procured in advance during H1 FY25 and pricing measures in H2 FY25 to help alleviate gross margin pressure. The decline in Asia's high-margin sales proportion further weighs on gross margin, partially offset by increased direct sales proportion (rising from 38% in the same period last year to 40% in H1 FY25) and Tumi's outperformance relative to the group average (Tumi sales decreased by 2.5% year-on-year at constant currency, while overall group sales declined by 5.2% year-on-year).

**Risk Factors:** Adverse macroeconomic factors; asset impairment losses; intensified external competition and internal brand competition; foreign exchange rate risk; uncertainty regarding secondary listing timing.