Could Richemont lose some of the Bling-factor?
After the recent third quarter sales update (€4,156m vs consensus of €4,165m), we saw Richemont enjoy a bit of rally, which subsequently saw the share price breakthrough its resistance line. This was however short-lived and ended up being a false breakout.
My biggest worries currently include:
• Continued weakness and recent downgrades in Hong Kong, could see some further pressure on the organic sales growth;
• Further slowdown in e-commerce;
• China GDP forecast by IMF for 2020 projected at 6%, down from 6.1% for 2019.
• Thomson Reuters (TR) target price for the company is R111.40, which gives investors currently no possible upside on the shorter-term (if consensus had to be right).
With CFR breaking back below the resistance line and its 8-day Moving Average (MA), could see the share price now test the 21-day MA at R113.43 over the short-term. The strongest support level remains the 200-day MA (at R111.64), which ironically coincide with the current TR target price. A break and close below the 200-day MA could very much see the share price test the R108 levels, with a break and close below these levels bring the October 2019 lows of R104 back into play. My preferred entry point is R98, but would most probably start buying at R101. My long-term view on Richemont still remain positive - would however like to see China turn more positive first.
My biggest worries currently include:
• Continued weakness and recent downgrades in Hong Kong, could see some further pressure on the organic sales growth;
• Further slowdown in e-commerce;
• China GDP forecast by IMF for 2020 projected at 6%, down from 6.1% for 2019.
• Thomson Reuters (TR) target price for the company is R111.40, which gives investors currently no possible upside on the shorter-term (if consensus had to be right).
With CFR breaking back below the resistance line and its 8-day Moving Average (MA), could see the share price now test the 21-day MA at R113.43 over the short-term. The strongest support level remains the 200-day MA (at R111.64), which ironically coincide with the current TR target price. A break and close below the 200-day MA could very much see the share price test the R108 levels, with a break and close below these levels bring the October 2019 lows of R104 back into play. My preferred entry point is R98, but would most probably start buying at R101. My long-term view on Richemont still remain positive - would however like to see China turn more positive first.
Trade active:
R104 target reached. Will monitor R98 as a possible entry level - if reached.