By Peet Serfontein & Jalpa Bhoolia
Compagnie Financiere Richemont SA is a Swiss luxury goods group managed with a view to the long-term development of successful international brands. CFR owns several of the world's leading brands in the field of luxury goods, with particular strengths in jewellery, luxury watches and writing instruments. Brands include Cartier, Alfred Dunhill, Montblanc, Lancel and Van Cleef & Arpels.
Technically, a price that displays a distinct uptrend (highlighted in the insert) makes for an attractive investment option.
The chart shows the price moving in such an upward trend. This is characterised by successive higher highs and higher lows as it reflects increasing investor confidence and positive sentiment towards the stock. Each new peak suggests investor optimism, while each higher low points to the stock's resilience during market dips.
Along the uptrend, the share typically progresses into subsequent stages, including a sideways or consolidation phase, and eventually a downtrend (refer to the detail provided in the insert).
According to the RSI (Relative Strength Index), the stock will be overbought at ~R3 250, which classifies our profit target of R2 990 as realistic.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R2 650.
Share Information
| Share Code | CFR |
|---|---|
| Industry | Consumer Discretionary |
| Market Capital (ZAR) | 1519.5 billion |
| One Year Total Return | 4.45% |
| Return Year-to-Date | 0.09% |
| Current Price (ZAR) | 2 569.86 |
| 52 Week High (ZAR) | 3 449.66 |
| 52 Week Low (ZAR) | 2 157.32 |
| Financial Year End | March |
| The current share price provides a good entry point, and several technical indicators suggest further upside potential. Expect moderate volatility in the price. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (EUR) | 6.78 | 6.52 | 7.14 | 7.91 |
| Growth (%) | -3.75 | 9.41 | 10.82 | |
| Dividend Per Share (EUR) | 2.50 | 3.21 | 3.49 | 3.84 |
| Growth (%) | 28.48 | 8.75 | 9.93 | |
| Forward PE (times) | 18.91 | 17.29 | 15.60 | |
| Forward Dividend Yield (%) | 2.60 | 2.83 | 3.11 | |
| Earnings growth is expected to be under some pressure for this year, but fundamentals are still solid. | ||||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | APN - BUY (Continue to hold) |
CFR - BUY (Continue to hold) |
NTC - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 182.66 | 2 331.00 | 13.80 |
| Current | 205.59 | 2 566.25 | 14.55 |
| Movement | 12.6% | 10.1% | 5.4% |
|
A price that appears to be developing a symmetrical triangle pattern remains of interest. Remains above its 200-day simple moving average. A pause in upside momentum is concerning.
Our profit target is R222, with a trailing stop-loss at R181.50. Exit the trade around 27 December 2024. |
A distinct upward trend continues to hold our attention. Upside momentum has resumed. Continues to stay below its 200-day simple moving average.
Our revised profit target is R2 990.00, with a trailing stop-loss at R2 400. Exit the trade in early May 2025. |
A price break through key support and the formation of a potential stable base, is noteworthy. Increasing price momentum is noteworthy. Crossed above its 200-day simple moving average.
Our take profit target remains at R15.50 with a trailing stop-loss level at R13.90. Exit the trade around 5 February 2024. |
| Share Name and position | MTN - Buy (Continue to hold) |
RDF - Buy (Continue to hold) |
MRP - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 102.08 | 3.78 | 157.50 |
| Current | 105.70 | 3.90 | 154.99 |
| Movement | 3.5% | 3.2% | -1.6% |
|
A potential mean reversion trade remains of interest. The share is below its 200-day simple moving average. Pause in upside price momentum is a concern.
Our take profit target remains at R122 with a trailing stop-loss level at R97.60. Exit the trade around 19 February 2024. |
A strategic investment opportunity. Continues to stay beneath its 200-day simple moving average.
Our take profit target remains at R4.50 with a trailing stop-loss level at R3.50. Exit the trade around 4 March 2024. |
A dip in the price that appears to coincide with a trough in the business cycle remains of interest. Paused upside momentum is a concern. Continues to stay above its 200-day simple moving average.
Our take profit target remains at R213 with a trailing stop-loss level at R135. Exit the trade around 17 April 2024 |
