LVMH to the MOON!

Written by Kader Djellouli

On January 26, LVMH’s reports its Q4 earnigns, and the fundamental question that remains is whether the current price is overvalued or whether the firm’s mad dash forward is only just beginning?

LVMH Moët Hennessy Louis Vuitton SE is the world leader in luxury goods. Revenue by product family is broken down as follows: Fashion and Leather Goods (48.1%): Louis Vuitton, Kenzo, Celine, Fendi, Marc Jacobs, Givenchy, etc. brands; Watches and Jewellery (14%): Bulgari, TAG Heuer, Zenith, Hublot, Chaumet, Fred, Tiffany, etc. brands; Perfumes and cosmetics (10.3%): perfumes (Christian Dior, Guerlain, Loewe, Kenzo, etc.), make-up products (Make Up, Hennessy, etc.), cosmetics (Hennessy, Hennessy, etc.), make-up products (Make Up For Ever, Guerlain, Acqua di Parma, etc.), etc.; as well as Wines and Spirits (9.3%): champagnes (Moët & Chandon, Mercier, Veuve Clicquot Ponsardin, Dom Pérignon, etc.; world number 1), wines (Cap Mentelle, Château D’Yquem, etc.), cognacs (in particular Hennessy; world number 1), whisky (in particular Glenmorangie), etc.

The world’s number one luxury goods company LVMH exceeded 400 billion euros in market capitalisation on the Paris stock exchange on Tuesday, a first for a European company. The firm’s capitalisation, which represents the amount of money it would take to buy all of the group’s shares, ended the session at 401.3 billion euros, according to Bloomberg.

Since the beginning of the year, the share price has risen by 17.28%, the sixth best performance of the CAC 40 index, boosted in particular by China’s economic reopening. It must be said that China represents about 30% of the customers of the luxury giants (LVMH, Hermès, Kering, etc.). The U-turn by Beijing, which has decided to reopen the economy and the borders of China, has greatly benefited the luxury segment on the stock markets, as the Chinese are the main consumers of the sector. The stock closed up 0.59% at 797.40 euros, after peaking at 803.20 euros shortly after 4pm (15:00 GMT). Since its low point of 2022 in early June, the stock has risen by almost 50%. As for the consensus of financial institutions and their analysts, out of 31 surveyed, 19 are Buy, 8 are Hold, 4 are Hold. (see below)

LVMH is by far the most valuable company on the European stock exchange, ahead of food giant Nestlé and Danish pharmaceutical company Novo Nordisk. But it pales in comparison to global behemoths such as Apple, which was worth more than $2.13 trillion at the US close on Friday. According to Bloomberg, LVMH is the 12th most valuable company in the world at 401 billion euros, making its owner Bernard Arnault the richest man in the world.

The reopening of China is one of the main “major trends” for the luxury sector in 2023, say RBC analysts in a note, for whom it is “reasonable” to envisage “a recovery trajectory for luxury demand in China”. In 2021, Asia, excluding Japan, represented 35% of LVMH’s sales. “Strong brands in China today will remain strong brands when Chinese consumers travel abroad,” they say, citing LVMH, but also French Hermès, which is also close to its record market capitalisation, and Italian Ferragamo.

Technical Analysis

The #LVMH price is currently at the level of $794.6 above its cloud, its KIJUN (Lv) and its Tenkan (Lj); the lagging span (Lb) is above the cloud and its peers clearly signifying a bullish momentum. The price could reach $803.3, but on the other hand, if the price starts to fall again, it could reach $758.1, and if this level is broken, it could reach the $737.6 support level in a second phase.

About the author

Kader Djellouli

Kader Djellouli est un trader spécialiste de l'analyse technique Ichimoku Kinko Hyo, il a acquis au fil du temps une profonde compréhension de la psychologie des marchés. Pour lui le trading est une question de patience et de discipline. Il s'efforce de partager ses connaissances par le biais de webinars et d'analyses quotidiennes, dans le but de donner aux clients de la société des informations pertinentes pour optimiser leur prise de décision.