摩根士丹利欧洲奢侈品行业欧洲奢侈品中国正在重蹈日本的覆辙吗20194325页

April3,201904:[e-mail]@[e-mail]-LineMORGANSTANLEY&CO.INTERNATIONALPLC+EdouardAubinEQUITYANALYST+44207425-3160ElenaMarianiEQUITYANALYST+39027633-5434OlivierNicolaiEQUITYANALYST+44207425-7049BrandsEuropeIndustryViewLuxuryGoodsLuxuryGoods||EuropeEuropeIsChinagoingthewayofJapan?WeseesignificantdifferencesJapanoffersacautionarytaleforChinawhenitcomestospendingonLuxuryGoods...In2005,JapanesenationalswerebyfarthelargestspendersonEuropeanluxurygoods,accountingforoverathirdofworldwidesales.Sincethen,theirspendinghascontractedbyathirdonacumulatedbasis(ineuros),weestimate.Fewhadanticipatedthemagnitudeofthedecline,asspendingonluxurygoodsinAsiawasexpectedtoonlygooneway:up...…ordoesit?Chinaisstillintheearlystage.IttookJapan25-30yearstogofromhavinganegligiblecontributiontoworldwidespendingonluxurygoodstomaturing(fromthemid70stotheveryearly2000s).Havingstartedinthelate90s,webelievethatChinaisstillinveryearlystage.Forexample,spendingpercapitastoodatonly~€60in2018vs.~€176intheUSand~€205inJapan.AnumberofstructuraldriversinChinaremainsupportivetoEuropeanluxuryplayers,suchas:a)strongexpectedeconomicgrowth.AsperMSestimates,China'srealGDPwillgrowbycloseto+6%CAGRin2018-23,amuchhighergrowthratethanthe+1.7%CAGRJapanexperiencedfrom1989(whenthebubbleburst)to2005(theluxurymarketpeak)-soprodigiouswasJapanesedemandforEuropeanluxurygoods(inouropinion,thisprovesthatdownsideinChinaislimited);b)consumptionincreasingasashareofGDP(currentlyonly38%vs.54%inJapanand66%intheUS)asChinamovesfurtherawayfromexport-ledgrowth;c)favorabledemographictrends.First,femalesstillunderindexsubstantially:theshareisupfrom~10%inthelate90s(aspurchasesthenweregift-basedandcompany-paid)toaround55%now.Goingforward,itshouldcontinuetoconvergetowardstheWest/Japanlevels(currently70-75%).Femaleempowerment,drivenbyincreasingparticipationintheworkforceandincreaseintheaverageageofmarriage(currently24yearsoldvs.28intheUSand30inJapan)andtranslatingtoselfgifting,shouldcontinuetobeamajordriverofluxurygoodssectorgrowthinChinainthenearfuture(boostingspendingonjewellery,leathergoodsandcosmetics).Second,theonechildpolicy(or4-2-1structure)hastranslatedinmillennials/Gen-Zreceivingsignificantfinancialsupportfromtheirelders(e.g.70%ofChinesemillennialsarehomeownersvs.only35%intheUS).Thesetwocohortscurrentlyaccountforc.80%ofindustrygrowth.WeshowhowanimportantreservoirofgrowthinTier2,3and4citiesshoulddrivestrongluxuryspending.WecontinuetopreferLVMHandMonclertoplaytheChinagrowth.WhileChinesenationalsaccountedfor33%oftotalspendingonluxurygoodsin2018,theirshareshouldreachtoapprox.50%by2025astheirspendinggrows+90%to€160bnovertheperiod.WhilenotthemostexposedplayerstoChinesenationals,weexpectLVMHandMonclertobenefitdisproportionatelyastheyshouldcontinuetogrowfasterthanindustryaverageamongChinesenationals.Exhibit1:Growthinluxuryspending2005-18e77201559-14-20020406080100ChineseAmericanOtherAsianRestofWorldEuropeanJapaneseGrowthinluxuryspending2005-18e,€bnSource:BainAltagamma,Euromonitor,MorganStanleyResearchestimatesExhibit2:Chinese&Japanesenationalsas%ofgloballuxurygoodsmarket0%5%10%15%20%25%30%35%199519961997199819992000200120022003200420052006200720082009201020112012201320142015201620172018as%ofglobalPersonalLuxuryGoodsMarketJapaneseChineseSource:BainAltagamma,MorganStanleyResearchestimatesMorganStanleydoesandseekstodobusinesswithcompaniescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanleyResearch.InvestorsshouldconsiderMorganStanleyResearchasonlyasinglefactorinmakingtheirinvestmentdecision.Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoNASD/NYSErestrictionsoncommunicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.1HistoricalbackgroundChinesenationalshavebeentheluxurygoodsindustrygrowthengineoverthepast15years.AsperconsultingfirmBainAltagamma,Chinesenationalsaccountedforonly3%ofspendingonluxurygoodsworldwidein2003.In2018,thatpercentageincreasedto33%.Thismeansthatthiscohorthasaccountedfor60%oftheindustrygrowthoverthepast15years.AsperBainAltagamma,itshouldaccountforapprox.85%oftheindustrygrowthby2025,asitsshareriseto46%.Eveniftheseforecastsprovetobeatouchoptimistic,wethinkthereisnoquestionthatChinesenationalswillremaintheindustrygrowthengineinshorttomediumterm.Asaresult,understandingpotentialdownsideriskstoChinesespendingonluxurygoodsremainkey.TowhatextentJapanoffersacautionarytalefortheLuxurysectorinChina?Whilethefundamentaldriversofdemandforluxurygoodsgloballyinthemediumtolongtermarerelativelywellknownandappearverysupportive,theconsensusviewintheearly2000sdidnotseethemagnitudeofthedeclineofluxuryspendcominginJapaninthefollowingdecade(wequantifythedeclinebelow),thenbyfarthelargestluxurygoodsmarketin