SWATCH GROUP: Is the worst over?

The downturn in Swiss watch exports has not yet come to an end. Fewer timepieces were sold abroad in November compared to the previous year. According to the Federation of the Swiss Watch Industry (FH), exports in the sector fell by -3.8% to CHF 2.41 billion in November (compared to the previous year). At first glance, this decline does not look that bad! However, the Chinese market was once again a major negative factor with a drop of 27%. The consumer crisis that has been evident there for several months is also having an impact on the watch sector. The "Middle Kingdom" is now only the fifth most important export market for Swiss watch manufacturers; it still accounts for 6.3% of exports. With China, sales to Hong Kong also failed to make any headway, falling almost 19% below the same month last year. However, both markets have now fallen so dramatically that the bottom has probably been reached or is not far away! So will the SWATCH share price soon be on the road to recovery?Unfortunately, fewer watches were also sold to Singapore (-6.1%) and Japan (-2.5%). Europe did not show any strength either... no wonder! A ray of hope, however, is the unbroken strong growth of +4.7% in the USA, by far the largest sales market with a share of 17.5%. More "Made in Switzerland" timepieces were also sold to South Korea (+22%) and Mexico (+6.9%). You can almost "tip the scales".

The analysis company Morningstar considers the SWATCH share to be heavily undervalued following the dramatic fall in value and claims to have identified a (theoretically) significantly higher price potential - converted to the registered share at CHF 66.60! The reasoning: The share is still very attractively valued. Luxury consumption is going through a cyclical downturn that historically lasts no longer than one to two years. We take a similar view and are sticking to our price target of CHF 54!