Rome Capital's Alex Feng and Jason Quan making the case for Samsonite $1910.HK

18 snips

Jul 29, 2024

Guest

Jason Quan

Guest

Alex Feng

Alex Feng and Jason Quan from Rome Capital Limited dive into the intriguing world of Samsonite, a giant in the luggage industry. They explore why Samsonite's valuation is considered a bargain and discuss the brand's strong market positioning and pricing power. Insights on the importance of warranties and how they foster customer loyalty are shared. They also touch on competitive advantages and the challenges posed by new entrants. Lastly, they consider the potential benefits of dual listings and buybacks as strategies for value enhancement.

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INSIGHT

Cheap Valuation Despite Strong Market Position

Samsonite is a global luggage leader with three major brands and regained efficiency after closing stores during COVID.
Its forward PE (~~10x) and EV/EBITDA (~~6.5x) look cheap versus US consumer peers, suggesting re-rating potential.

INSIGHT

Listing Venue Drives Valuation And Liquidity

Hong Kong listing and geopolitical capital flows have reduced investor attention and liquidity for international names like Samsonite.
A US or European secondary listing could attract mutual funds and analyst coverage and materially change valuation.

INSIGHT

Brand Power Supports Pricing And Returns

Samsonite shows brand-driven pricing power with ASP rising ~5% CAGR in recent years, supporting margin resilience.
That pricing and scale let it earn returns above its cost of capital, making it a B/B+ business rather than a commodity.

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Alex Feng and Jason Quan from Rome Capital Limited join the podcast to discuss their thesis on Samsonite International (1910.HK), a leader in the global lifestyle bag industry and the world's best-known and largest travel luggage company.

Alex Feng's write-up on Samsonite: https://alexfeng.substack.com/p/samsonite-1910-hk-another-homecoming

Chapters:

[0:00] Introduction + Episode sponsor: Ycharts

[1:51] Alex Feng, Jason Quan and Rome Capital's backgrounds

[3:15] Overview of Samsonite and why it's interesting to Alex and Jason

[6:00] What is the average market participant missing with Samsonite

[9:25] Why is Samsonite valuation a "cheap" multiple (in Rome Capital's opinion); why Samsonite a "A" business and not a "C" business; pricing power / consumer awareness

[17:02] How important is Samsonite's warranty on their products / supply chain

[21:18] Samsonite's dual listing plan / does Alex and Jason think that simply re-listing to the US can re-rate the shares

[29:00] Instead of dual-listing, why not focus on buybacks

[33:40] What happened to the private equity bid; history with CBC back in 2007

[36:13] Wholesale partners, is that one of their competitive advantages / how much does advertising really drive demand and consumption

[39:47] Barriers to entry - what is the risk here with new luggage brands entering the market

[45:49] Final thoughts on Samsonite

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