全球量化策略-基本面分析：我们的琥珀棋分析框架之对奢侈品的洞察

abGlobal Research | 3 November 2021We provide a scalable approach to identifying anomalies in financial statementsFor outsiders looking into a company, financial statements provide a gateway for investors and analysts to understand the economic reality and financial health of a company. However, given the large universe of companies in the market, it is difficult for us to read through each company’s financial statement from cover to cover. We therefore provide a scalable framework to identify any anomalies – we term them “amber flags” – in financial statements. We apply our amber flags approach to the European Luxury sectorIn our previous note, we applied our amber flags approach to the European Beverages, Tobacco, and European Chemicals sectors. In this note, we collaborated with our colleagues from the European Luxury sector to apply our amber flags framework to 10 Luxury companies under UBS coverage.Key conclusions: An industry significantly affected by the pandemic, but a recovery is forecastThe Luxury sector has been significantly impacted by the pandemic, with several companies having delivered lower operating profit margins and incremental return on invested capital than historically. To preserve cash, Luxury companies cut back capex in FY-20, leading to higher cash conversion ratios, helped by a faster than initially anticipated recovery in sales. Consensus expect the sector to continue to bounce back over the next three years, with margins and turnover both forecast to increase, and possibly a reversal of some of the inventory write-downs that we have seen in the case of Burberry. On a company level, we found that Swatch's structural problem of having high inventory (close to 100% of sales) is forecast to persist, thus implying little improvement to its challenged fundamentals. Although Tod's was already loss-making before COVID, the position has been exacerbated by the pandemic, leading to a low profit margin alongside a high debt/EBITDA ratio, partly due to the debt restructuring at the end of FY-20.EquitiesGlobalFundamental AnalyticsYiding Lu, CFAAnalyst yiding.lu@ubs.com +44-20-7568 9091Geoff Robinson, CFM, FCAAnalyst geoff.robinson@ubs.com +44-20-7567 1706Zuzanna Pusz, CFAAnalyst zuzanna.pusz@ubs.com +44-20-7567 1883Susy Tibaldi, CFAAnalyst susy.tibaldi@ubs.com +44-20-7568 5989Chris HuangAssociate Analyst chris.huang@ubs.com +44-20-7901 6240Courtney Cook, CFAAnalyst courtney.cook@ubs.com +44-20-7567 4871Renier Swanepoel, ACA, CA(SA)Analyst renier.swanepoel@ubs.com +44-20-7568 9025This report has been prepared by UBS AG London Branch ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 31. UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as on