Raising Samsonite’s FVE to HKD 25 on Better China Outlook; Shares Undervalued

We raise our fair value estimate for Samsonite to HKD 25.00 from HKD 23.20, after China further relaxes COVID-19 controlling measures. The change to our valuation reflects greater steps toward reopening and specifically scrapping various travel restrictions. This benefits: 1) Samsonite's China sales, which contributed 9% of revenue before the pandemic but dropped to 7% of total revenue in the third quarter of 2022; and 2) purchases by Chinese consumers overseas, which we estimate to represent a low-single-digit percentage of Samsonite's sales. Coupled with heavy pent-up demand and a better margin profile in China, we lift our earnings forecasts by an average of 11% over the next three years. Shares of Samsonite are undervalued, trading at a 17% discount to our fair value.