Samsonite shrugs off short seller attack as it plans to add more stores in Asia-Pacific
Two months since the surprise short seller attack on Samsonite, which wiped out more than US$1 billion from its market value at the end of May, the company says that the incident has had no major impact on its operations and that it was still looking to expand.
The Hong Kong-listed shares of the world’s largest luggage maker by volume lost more than 22 per cent of its value at the end of May after Blue Orca questioned its accounting practices.
“The [short seller] attack hasn’t impacted our business at all,” said Subrata Dutta, president of Samsonite Asia-Pacific, during an interview.
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“We haven’t lost any market share as we kept focusing on innovations and keeping our customers delighted, that is what matters to us,” he said.
The owner of American Tourister and Tumi brands derives around one third of its revenue from Asia including China and Hong Kong.
The company has had “a good first half”, and is expected to deliver double-digit revenue growth in the second half, said Dutta.
“We are eyeing 22 to 25 new stores in the Asia-Pacific region for Samsonite in the second half of the year to cash in on the growing demand for travellers’ goods there.”
One of the few foreign companies that has chosen to list in Hong Kong including Prada, the Luxembourg-based company was once the darling of the Hong Kong bourse, adding 171 per cent from its debut price of HK$13.46 in 2011 to its peak of HK$36.55 in April.
It was trading at HK$31.15 on Monday, slowly recovering from its losing streak caused by short selling when the shares dropped to HK$26.9 on May 25.
The company’s strong fundamentals and prompt decision to replace former chief executive Ramesh Tainwala, who was accused by Blue Orca of falsely claiming to hold a doctorate, have helped to ease investors’ worries, said analysts.
Samsonite has said that its disclosure of Tainwala’s educational background is accurate.
“I still have a pretty positive view on Samsonite, and I think it should be able to recover all the lost ground pretty quickly,” said Terry Hong Xueyu, an analyst with Guotai Junan Securities. Hong has a target price of HK$40.4 and a “buy” rating.
Mariana Kou, head of China education and Hong Kong consumer research at CLSA, said that the market is in the process of rebuilding confidence in the management team and is waiting for the first half results.
“Solid fundamentals should be able to help gain investors’ confidence back,” said Kou, who has a target price of HK$36.60.
The company has 12 “buy” ratings, two “hold” and one “Sell”, according to analysts polled by Bloomberg.