L'Occitane Reports In-Line Results; FVE Remains HKD 36.60

Narrow-moat L'Occitane's fiscal first-quarter's (which ended June) trading performance was in line with our expectations. Constant currency sales were up 16% year over year (off a high base of 28% growth in the same quarter last year). Despite the challenges of ongoing lockdowns in China, management maintains its full-year guidance. For fiscal 2023, we continue to expect revenue to grow at a constant currency rate of 13% and an operating margin of 16%. We maintain our fair value estimate for L'Occitane of HKD 36.60 per share. We view the firm's shares as undervalued as at the close of business on July 29, trading at about a 27% discount to our fair value.