1

MONCLER
F i n a n c i a l T h e o r y a n d Co r p o rat e Po l i c y - Inve s t m e nt Ba n k i n g Sp e c i a l i z ati o n , O P 9 2 M
TEAM 3
Lu i s a Ba l b o , D e n i s To n o n , C l a u d i o Ma nf re d o n i a , Ia co p o Bo n , F i l i p p o D e a s ti , N i ra j Ba r u a h
 CONTENT OVERVIEW
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COMPANY BACKGROUND BUSINESS DESCRIPTION HISTORICAL PERFORMANCE PEER COMPARISON

OUR TEAM OUR SERVICES OUR PORTFOLIO OUR DEVICES

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COMPANY BACKGROUND &

BUSINESS DESCRIPTION

 Moncler Main Events
FOUNDATION
1952
Founded by René Ramillon and
André Vincent, Moncler took
the name from the
abbreviation of Monestier-de-
Clermont , a village in the
mountains near Grenoble,
France.
COMPANY BACKGROUND
NEW PROPERTY
2003
Moncler was bought out
by Italian entrepreneur Remo
Ruffini, chairman and CEO
IPO
2013
The IPO on the Milan Stock
Exchange took place on
December 2013, with an initial
value of €10.20 per share.
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NOW
2020
In December 2020, Moncler
purchased a 100% stake of
Italian luxury brand Stone
Island in a reported €1.15
billion acquisition.
 BUSINESS DESCRIPTION
 Moncler Value-Chain
ABOUT
Italian luxury fashion brand
mostly known for its skiwear.
However the Group is now
selectively expanding into
complementary categories
able to become part of its
core business
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PRODUCTION DISTRIBUTION
Moncler has a direct control of all Moncler is present in all
phases where the greatest value is major market with a
added: multichannel approach:
• Creative phase • Retail stores
• Raw materials purchase • Wholesale stores
• Development of prototypes • Online channel
• Cut-make-trim partially outsourced
• Distribution
 COMPANY STRATEGY
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SUSTAINABLE GROWTH PRODUCT RANGE EXPANSION OMNICHANNEL APPROACH STRENGHTEN DIGITAL CULTURE

Focus on long-term
sustainable growth, fully
integrated into the
Group’s strategy and
aligned with its core
values
The Group is now Engaging directly with Moncler considers digital
selectively expanding clients through every channel as a crucial and
into complementary channel and touch point indispensable tool for brand
categories able to communications and business
become part of its core growth at global level, in an
business omnichannel perspective
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HISTORICAL PERFORMANCE
ANALYSIS
 GROWTH ANALYSIS
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Operating
2,000,000 revenue Chart Title
● (Turnover) (th 0.900
USD)
1,800,000
0.800

1,600,000
0.700

1,400,000
0.600
1,200,000
0.500
1,000,000
0.400
800,000
0.300
600,000
0.200
400,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0.100
th USD

0.000
Italy Rest of Europe Asia & Others America
 RETURN ANALYSIS
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YO U R G R E AT S U BT I T L E

Ratio Analysis: 2019 2018 2017 2016 2015

Return on equity (including non-recurring items)

27,5% 31,1% 27,0% 27,9% 30,7%
Return on equity (excluding non-recurring items) 27,5% 31,1% 27,0% 27,9% 30,7%

Sales growth (%)

12% 14% 31% 14%

Traditional ROE decomposition          

Net profit margin (ROS)
22,0% 23,4% 20,9% 18,8% 19,1%
× Asset turnover
0,75 1,05 1,07 1,15 1,13
= Return on assets (ROA)
16,6% 24,5% 22,4% 21,8% 21,6%
× Financial leverage
1,65 1,27 1,21 1,28 1,42
= Return on equity (ROE)
27,5% 31,1% 27,0% 27,9% 30,7%

Alternative ROE decomposition          

Net operating profit margin 23,0% 23,4% 21,0% 19,0% 19,6%
× Net operating asset turnover 1,26 1,93 1,81 1,75 1,55
= Return on Net Operating Assets 28,9% 45,1% 38,0% 33,3% 30,2%

Return on Net Operating Assets 28,9% 45,1% 38,0% 33,3% 30,2%

x (Net Operating Assets/Invested Capital) 0,64 0,58 0,60 0,63 0,69
+ Return on Non-Operating Investments 0,1% 0,1% 0,1% 0,1% 0,1%
x (Non-Operating Investments/Invested Capital) 0,43 0,49 0,41 0,32 0,25
= Return on Invested Capital 18,52% 26,36% 22,66% 21,02% 20,76%

Spread 16,2% 25,9% 21,9% 20,0% 19,2%

× Financial leverage 0,55 0,18 0,20 0,34 0,52
= Financial leverage gain 8,9% 4,7% 4,4% 6,8% 9,9%

ROE = Return on Invested Capital + Financial leverage gain 27,5% 31,1% 27,0% 27,9% 30,7%
 LEVARAGE ANALYSIS & EVA
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Structure Ratios 2019 2018 2017

Current Ratio 2,1 2,4 2,4

Liquidity Ratio 1,7 1,9 1,9

Solvency Ratio 50,9 65,8 66,9

Gearing 55,1 18,3 20,0

EVA Calculation 2019

NOPAT 420,5

Total Asset 2882,0

Current liabilities 630,2

WACC 5,8%

EVA 290,7
 STOCK PRICE EVOLUTION
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MAIN INSIGHTS

Stock Data end-2019 end-2018 2019/2018 end-2017 end-2016 end-2015

MONCLER share price (euros) 28,82 22,18 30% 26,60 21,10 19,25

MONCLER overperformed the italian stock

market by far. In particular the MIB index,
which conteins the largest 40 italians
companies for markt capitalization,
decresed by 16% in 2019, while
MONCLER incereased by 30%.

Major indices 2019 2018 2019/2018

% change
MIB 18.324 21.853 -16%
Euro STOXX 50 3.745 3.001 25%
Dow Jones Industrial Average (U.S.) 28.538 23.327 22%
Nikkei (Japan) 23.657 20.015 18%
 PEER COMPARISON
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YO U R G R E AT S U BT I T L E

ROE DECOMPOSITION
Company name

MONCLER
ROS

22%
Asset tournover

0,75
ROA

16,6%
Financial lavarege

1,65
ROE

27,5%
Moncler has the highest ROS among the
LVMH

CAPRI HOLDINGS LIITED

13,4%
10,4%
0,73 9,7%
10,7%
1,02 9,9%
26,6%
competitors considered. Therefore, the
company is able to achieve a 27,7% ROE
1,03 2,49
BURBERRY 12,5% 1,30 16,2% 2,40 38,9%
REALPH LAUREN 6,8% 1,33 9,1% 2,55 23,2%
SALVATORE FERRGAMO 6,2% 1,01 6,3% 1,80 11,3%
thanks to the premium price charged on its
products, taking advantage of its brand
awareness. On the other hand, the majority of
its competitors has an highest Financial
Leverage, allowing them to achieve a
significant ROE. However, this can affect the
repayment capacity of the company
considered and increase their financing costs in
the long run.
 OUR SERVICES
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YO U R G R E AT S U BT I T L E

01
RESEARCH
02
MARKETING
03
BRANDING

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04
GRAPHIC DESIGN
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SEO ANALYSIS
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EMAILING

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 ARROW INFOGRAPHIC
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YO U R G R E AT S U BT I T L E

01 SUSTAINABLE GROWTH
long-term sustainable and responsible growth, fully
integrated into the Group’s strategy and aligned with its
core values
ANALYSIS
Over the course of the last
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COST OF CAPITAL
CALCULATION
 BETA CALCULATION
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Moncler  

Alpha 0,013
Beta 0,75
R 0,092

Burberry   Raw Beta Beta Unlevered Industry Beta

Alpha 0,004
Beta 0,73 0,75 0,712
R 0,103 0,94 0,641 0,70
0,73 0,638
Ralph Lauren   1,04 0,827

Alpha -0,007
Beta 0,94
R 0,121

Salvatore Ferragamo

Alpha -0,008
Beta 1,04
R 0,167
 WACC (1 of 3)
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 Risk Free Rate and Market Risk Premium

50%

30%
MRP
10%
1986-2020 1,8%
-10% 2003-2020 4,2%
2014-2020 9,9%
-30%
5,5% - 6%
-50%
8 6 88 90 92 94 96 98 00 0 2 0 4 06 08 10 12 14 16 18 20
19 19 19 19 19 19 19 20 2 0 2 0 20 20 20 20 20 20 20 20
MSCI WORLD 10y BUND

To estimate the MRP we used the MSCI WORLD Index as a fair representation of the market portfolio and the 10y Bund,
representing the riks free rate. Through the analysis of their historical data we came up with 3 different period from
which we made our assumpition on the actual MRP
 WACC (2 of 3)
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 Cost of Debt and Cost of Equity

Cost of Equity  
Rf  US 10y Treasury Rf 1,70%
Rm-Rf 5,70%
MRP  Assumption based on previous calculation
Industry Beta 0,70
Beta Levered calculated using the Industry Beta and the Financial Beta Levered 0,74
Structure of Moncler D/E 4,9%
Ke 5,9%

Cost of Debt  
Kd  Interest expenses / Financial Debt Kd 3,60%
Tax rate 23,80%
Tax Rate  Based on NI before and after taxes (1-t) 76,20%
Kd after tax 2,74%
 WACC (3 of 3)
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 WACC Calculati on

Market Value Target Weights Cost Tax Cost After Tax Weighted Cost
 

Equity 10.300 95,4% 5,9%   5,91% 0,0564

Debt 500 4,6% 3,60% 23,80% 2,74% 0,0013

10.800 5,8 %
WAC
C
 Target Capital Structure (1 of 4)
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Assumptions

Investment in a new plant, machinery, and WC 6,335 €bn

Annual profit before tax (Ebit) in perpetuity 475 €m

Tax rate (as in most recent years) 23,8%

Payout: All earnings are distributed 100%

 Target Capital Structure (2 of 4)
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 Price Per Share (PPS) and Weighted Average Cost of Capital (WACC)

Leverage (%) PPS (€) WACC (%)

0 25,2 5,70

10 25,3 5,68

20 25,4 5,67

30 24,1 5,96

40 22,3 6,46

50 20,2 7,12
 Target Capital Structure (3 of 4)
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 Entreprise Value (EV) and Weighted Average Cost of Capital (WACC)

Leverage (%) EV (€bn) WACC (%)

0 6,350 5,70

10 6,376 5,68

20 6,384 5,67

30 6,076 5,96

40 5,602 6,46

50 5,084 7,12
 Target Capital Structure (4 of 4)
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 Cost of Debt (Kd) and Cost of Equity (Ke)

Leverage (%) KD (%) KE (%) WACC(%)

0 3,6 5,7 5,70

10 3,6 6,0 5,68

20 4,1 6,3 5,67

30 5,1 6,9 5,96

40 6,4 7,8 6,46

50 7,9 9,0 7,12

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FORECASTS
 Forecasts
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Revenue growth trends before COVID disruption was comfortably above 14%. We estimate revenues from 20E to
24E for each of the Three KPIs:
a) Retail Revenue Growth
b) New Stores opened
c) Average store square meter area

Revenues are computed considering as a driver of growth:

a) Retail Revenue Growth, which Management assumes at 7% for next years starting 2018
b) New DOS Openings, ca 15 per year.
c) Average store square meters for the retail network, which will increase considering relocations and new flagship
openings.

Note:
However for total Revenue growth, we will consider the Retail revenue Growth as the total Revenue Growth as the
number of physical stores opened after COVID disruption is negligible.
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Forecasts
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ENTERPRISE VALUE & EQUITY

VALUE
 Entreprise Value and Equity Value
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 Discounted Cash Flows

DCF Model 2019 2020E 2021E 2022E 2023E 2024E

EBITDA 744,73 796,86 852,64 912,32 976,18 1044,52

Tax over EBIT -138,12 -147,79 -158,14 -169,21 -181,05 -193,72

Change in Working
Capital -25,81 -10,08 -10,78 -11,54 -12,35 -13,21

Capex -120,00 -90,00 -90,00 -90,00 -90,00 -90,00

FCF to the firm 460,80 548,99 593,72 641,58 692,79 747,58

Terminal Value 18546,84

FCF with terminal

value 460,80 548,99 593,72 641,58 692,79 19294,42

NPV (Entreprise Value): 16,250 €bn

 Entreprise Value and Equity Value
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 Multiples Valuation

Competitors EV/EBITDA EV/SALES

Burberry 10,87 2,24

Salvatore Ferragamo 8,6 2,14

Ralph Lauren 3,74 0,41

LVMH 21,4 6,15

Capri Holding Limited 3,96 0,58

Average 9,7 2,3

Median 8,6 2,14

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RECOMMENDATIONS
 Recommendations (1/2)
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 Valuation Price Per Share

2019 2019 Real

Based on our
Enterprise Value 16.250 10.800 valuation the stock
- Net financial debt -1.038 -500 is undervalued
- Provisions -19 -19
Our estimated price
- Minority Interest 0 0,01
per share is 60,
Equity Value 15.193 10.300 whereas at the end
Number of shares (million) 252,0 252,0 of 2019 in reality it
Price per share 60 41
was 41, so it should
be profitable to hold
EV/EBITDA 20,4 15,56
or buy Moncler
EV/SALES 8,3 6,34 stocks
 Recommendations (2/2)
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 Strategies to improve Stock Price

 Increase Leverage : Kd at 2,74 % is extremely low (infact, the optimal capital structure suggests an optimal leverage
level of 20%)

 Share Buyback. In fact, according to our valuation the PPS should be higher than the real one (€ 61 vs € 40; +32%)

 Mergers and Acquisition (M&A): The effect of M&A on stock return is usually positive. Whilst on a pre-merger stage
the price of the acquiring firm usually experiences a temporary drop in value and the share price of the target firm
typically spikes; post-merger, the combined entity of the newly-formed entity typically exceeds the value of each
company during its pre-merge stage.
As a matter of fact, Moncler acquired Stone Island on December 2020 . Its share price was really affected by this
strategic move: at the end of November 2020 the stock was traded at 41,70, meanwhile after concluding the
agreement in December, the share price jumped to 50,14 (+20,21%).