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Summarized by durumis AI
- LVMH is a luxury goods company headquartered in France, owning a variety of luxury brands.
- LVMH achieved record performance even during the COVID-19 situation.
- LVMH is a company expected to continue growing based on its sound financial structure and shareholder-friendly dividend policy.
It is often said that there are three major luxury brands.
Hermès, Louis Vuitton, and Chanel, commonly known as Erusha, are the main players.
Today, we will take a look at LVMH (Louis Vuitton's parent company), which is a listed company.
Company Overview
Company Name
LVMH, Moët Hennessy Louis Vuitton
Ticker Symbol
MC (French Stock, Listed on Samsung Securities)
Date of Establishment
1987
Business Contents
Wine and spirits, fashion clothing, perfumes and cosmetics, watches, etc.
Company Website
Market Capitalization
EUR 3,344.58 billion
Current Price
EUR 666.6
LVMH is a company headquartered in France and is the largest company in France in terms of market capitalization.
It has Louis Vuitton, which is familiar to us, as a subsidiary, and also owns many other famous companies in the luxury goods sector.
It could be called the No. 1 in luxury goods. (Hermès and Chanel are exceptions as they are unlisted companies)
It is also famous for aggressively making M&A to maintain its market dominance in luxury goods.
In 2021, it also merged with Tiffany & Co., famous for wedding gifts.
LVMH has classified its business into six main categories, and the core businesses are as follows.
You don't have to take notes, just take a quick look.
Wine and Spirits
Fashion and Leather Goods
Perfumes and Cosmetics
Watches and Jewelry
As you can see, LVMH owns many companies that stand out in luxury goods.
Not only Louis Vuitton, but also Berluti, Rimowa, Dior, Celine, Givenchy, Bulgari, Tiffany & Co., Tag Heuer, etc.
It has such a solid portfolio that it's hard to list all the famous companies.
Through this business, LVMH holds the top spot in market capitalization not only in France but also in Europe.
Just like Samsung Electronics in Korea and Apple in the US, LVMH can be seen as the representative company of France.
Source: LVMH - 2021 Financial Documents
What we need to keep an eye on this year is the realization of profits from non-mainstream industries other than the fashion clothing business.
As you can see, the wine business has grown significantly,
and the precious metals business has also achieved great results thanks to the Tiffany & Co. M&A effect.
Source: LVMH - 2021 Financial Documents
LVMH is making the most profits in Asia, excluding Japan.
Therefore, we need to keep an eye on the Asian market in the future.
However, changes in Chinese policy are considered a risk factor.
Stock Information
Before sharing stock information, I have written down my own criteria for judging how high-quality this stock is,
but please note that this criteria is not the answer, so please use it for reference only.
Sales Analysis
Classification
2019
2020
2021
Sales Revenue
53,670 (million euros)
44,651 (million euros)
64,215 (million euros)
EPS
14.25
9.34
23.90
Net Profit Margin
13.36
10.53
18.74
https://www.lvmh.com/news-documents/press-releases/new-records-for-lvmh-in-2021/
This is LVMH's recent 3-year financial performance.
The past three years have been a period of declining overseas travel due to COVID-19, which was expected to lead to a decrease in travel retail activity.
However, looking at the 2021 performance, it seems that the negative impact of COVID-19 has been completely overcome.
On the contrary, it has recorded its highest ever performance due to revenge spending.
Debt Analysis
Classification
2019
2020
2021
Debt Ratio (%)
(Total Debt/Total Equity)
158.92
186.98
162.15
Current Ratio = Liquidity Ratio (%)
(Current Assets/Current Liabilities)
117.18
157.88
122.55
Debt ratio is a measure of the debt ratio of the company as the name suggests.
However, it is reasonable to look at it together with the current ratio, as the debt ratio can increase in the short term due to business expansion, etc.
A high debt ratio means that the company is aggressively expanding its business,
and a low current ratio means that the company is maintaining its business with healthy cash flow.
In fact, the debt ratio increased in 2020, but this appears to be due to the impact of mergers and acquisitions (M&A), such as Tiffany & Co.
However, the current ratio decreased significantly in 2021, when the effects of the merger and acquisition became apparent, returning to the situation before COVID-19.
This shows the sound financial performance of LVMH.
Current Stock Analysis
PER
27.89
Competitor's PER
Kering (Gucci's parent company): 25.05
PER is a valuation indicator that shows how much the current stock price of a company is overvalued compared to its earnings.
The higher the PER, the more overvalued the current stock price is considered to be.
However, it is difficult to make a blind judgment of whether it is high or low if there is an influx of investment funds, so
it is appropriate to compare it with the PER of the most similar competitors in each industry.
Here, LVMH's price-to-earnings ratio is 27.89 times, which is not much different from Kering, the parent company of Gucci.
Therefore, the current stock price appears to be suitable for investment.
Average Annual Dividend Yield
Classification
2019
2020
2021
Dividend Yield (%)
1.16
1.17
1.38
Dividend Payout Ratio
33.68
64.27
41.84
Dividend (EUR)
6.2
4.6
7
LVMH has a dividend payout ratio of about 30-40%, making it a shareholder-friendly company.
Dividends are also on an increasing trend year after year.
Therefore, if the company is expected to grow, it is a stock suitable for long-term investment.
Conclusion
We looked at LVMH, a leading company in the luxury goods market and the No. 1 company in France and Europe.
LVMH is running ahead of the pack in this area with its strong business portfolio.
It is also aggressively making M&A with a sound financial structure.
This is also a key factor in the company's continued growth.
And as the company grows, it is a shareholder-friendly company that distributes to shareholders,
Simply owning it will make it even more valuable.
We recommend LVMH, as if you were buying luxury stocks instead of luxury goods.
One-liner review
LVMH shares are attractive if you consider the history of luxury goods.
I have analyzed LVMH's company information and analysis according to my subjective opinion, so please judge this information as a reference.
Investors are responsible for actual stock purchases, etc.
Other Helpful Information
1. LVMH Investor Site
https://www.lvmh.com/investors/
2. LVMH Shareholder Club
LVMH offers small benefits to investors.
You can join the shareholder club even if you only own 1 share, so please refer to it.
https://www.lvmh.com/investors/individual-shareholders/shareholders-club/
