LHV Institutional 'Silvano Fashion Group (SFG1T ET) Annual Review, July 3rd, 2020'
* AS Silvano Fashion Group (‘Silvano’ or the ‘Group’), founded in 1908 and based in Tallinn, Estonia, designs, manufactures, distributes, and retails lingerie products. Silvano consists of production units and entities that specialise in distribution and retail. During the last five years, Silvano’s total revenues declined at a five-year compounded annual growth rate (‘CAGR’) of 3.3% due to a significant decline in its wholesale operations. In 2019, total revenues declined 8.5% y-o-y to EUR 56.9m due to a notable decline in revenues from Russia and Ukraine. Given the COVID-19 crisis, we assume that the sales would decline by 30-35% y-o-y in 2020 and then it would rebound (around 35% y-o-y) in 2021. During 2022-2024, we assume revenue growth in a 4-7% y-o-y range.* We have reassessed our fair value range for Silvano based on the Group’s operating performance and macro factors in its key markets. Given that the earnings outlook in its key markets is bleak, we have revised down our forecasts and, accordingly, have changed our fair value range from EUR 2.20-2.40 to EUR 1.90-2.10. The main triggers for an upward move in share prices include a sustainable appreciation in the RUB and BYN; better than expected growth in local currency revenues; and improved profit margins. Key potential risks for our target price include unfavourable movements in foreign exchange rates; retail stores/factory closures due to the COVID-19 crisis; complications in logistics; and further deterioration in the Russian/Belarusian economies, potentially leading to lower than expected retail spending.
* This report contains a full set of financial forecasts and is useful for gaining an initial insight into the company. Please also refer to the tables and charts in the attachment.
Silvano Fashion Group AS (SFG), formerly PTA Grupp AS, is an Estonia-based company, which is mainly engaged in the design, manufacture and marketing of women's apparel and lingerie. In addition, the Company provides sewing services to other manufacturers of women's lingerie. The Company owns such brands as Milavitsa, Alisee, Aveline, Lauma Lingerie and Laumelle. The Company is active domestically and abroad in such countries as the Russian Federation, Belarus, Ukraine and the Baltic States, where the Company sells its products through its retail chains, such as Milavitsa and Lauma Lingerie. Silvano Fashion Group AS operates eleven subsidiaries, located in Latvia, Belarus, France and the Russian Federation.
LHV Bank is an independent pan-Baltic bank, based on Estonian capital. The company was founded in 1999 by two founders of Hansapank (today’s Swedbank in the Baltics) and has been offering a full range of investment services for 15 years. In May 2009, LHV received a credit institution licence allowing it to provide all banking services.
The head office is situated in Tallinn, Estonia. Cross-border services are offered in Vilnius, Lithuania and in Riga, Latvia. LHV provides brokerage (institutional and retail), asset management, banking and capital markets services. Compared to other banks, we are more innovative and have more solid experience in investment and entrepreneurship.
The Bank, together with the Group asset management company employs over 320 people. LHV Group shares are listed on Nasdaq Tallinn.
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