Compagnie Financiere Richemont SA (CFR)
They say Diamonds are a girl’s best friend? well then, a girls second best friend should be the Switzerland-based jewellery company known as Richemont. After all, why wait for a slice of cake when you can buy and enjoy the whole damn thing.
So, if you love the finer things in life and you relate to some of Richemont’s brands like Cartier, Chloé, Dunhill, IWC Schaffhausen, Officine Panerai, Piaget, Montblanc and Van Cleef & Arpels to name a few then this stock should be part of your portfolio.
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Fundamentals and outlook
Richemont, as it is more commonly known in South Africa, is a luxury goods holding company founded back in 1988 by Johann Rupert. The company is a duel-listed stock and trades on both the SIX (Swiss Exchange) and the JSE Securities Exchange.
The company’s latest F19 Earnings released on 31 March 2019 saw sales across the globe pick up significantly, and was reaffirmed with the trading update for the first quarter ended 30 June 2019. Some financial highlights from this update were that sales increased by 12% for the quarter. Excluding online distributors, sales rose by 6%. Double digit growth in Japan and Asia Pacific, as well as high single digit growth in the Americas, more than compensated for decreases in Europe and the Middle East and Africa.
Richemont also pays a very attractive dividend, with the last day to trade set for Tuesday, 17 September 2019. Its pay date follows the Annual General Meeting, which is scheduled to take place in Geneva on Wednesday, 11 September 2019.
Stock benefits
Besides investing into Richemont you can also use it to your benefit as a Rand Hedge. Hedging means to protect one’s investment against a weakening currency, which in our case would be a weakening Rand (ZAR). Keep your eyes open and your ears to the ground, and if you see the Rand (ZAR) start to depreciate, know you can then hedge that risk. These Rand Hedged Stocks are companies which derive most of their income and earnings from overseas operations, like Richemont.
Take note
Traditionally, a weakening currency has a negative effect on the Financial and Retail sectors which might see these stocks under pressure while the Rand is also falls under pressure.
Chart Life
We have seen the price action of Richemont sell-off from the 12559c per share resistance level once more as international trade pressures mount. The next technical level to watch would be the 11565c per share support level as we see some Rand (ZAR) strength return. The uptrend is still intact and a lower buy opportunity might present itself around the 11000c per share level.
Source - Bloomberg
Portfolio particulars:
- Portfolio Hold (Current)*
- Portfolio Buy opportunity: close abov 11 000cc per share**
- WhatsTheBeef long term target price: 13 500c per share
Know your company: Compagnie Financiere Richemont SA (CFR)
- Johann Rupert founded Compagnie Financière Richemont SA in 1988 when he spun off the international assets of Rembrandt Group Ltd. (now Remgro Limited), a South Africa-based company founded in the 1940s by his father, Anton Rupert
- Richemont employs over 30,000 people around the world. These employees work for 20 different ‘maisons’. Richemont, which calls its different business entities maisons, runs each of these brands separately.
- As of 2014, Richemont is the second-largest luxury goods company in the world after LVMH Moët Hennessy – Louis Vuitton SE (LVMH)
- The company also has a 50/50 joint venture with Polo Ralph Lauren. This venture established the Polo Ralph Lauren Watch and Jewellery Company.
*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio.
**Portfolio Buy opportunity refers to Technical level crossed which might imply that the markets behaviour would support the outlook and Close above refers to a share price close above a Technical Resistance level.
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Barry is a market analyst with GT247.com, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.
