My Heart Bodibra Group Limited (SEHK:8297), a HKDHK$122.40M small-cap, operates in the consumer discretionary industry, whose performance is predominantly driven by consumer confidence. Macro elements tend to determine how fast, and how often, consumers buy luxury goods. Consumer discretionary analysts are forecasting for the entire industry, a strong double-digit growth of 13.65% in the upcoming year . Today, I’ll take you through the sector growth expectations, and also determine whether My Heart Bodibra Group is a laggard or leader relative to its consumer discretionary sector peers. View our latest analysis for My Heart Bodibra Group
What’s the catalyst for My Heart Bodibra Group’s sector growth?
E-commerce continues to be the fastest growing sales platform for consumer discretionary goods, changing the landscape for retailers. A large number of store closures and bankruptcies illustrates the shift in consumer preferences and increasing online competition. In the past year, the industry delivered growth in the forties, beating the Hong Kong market growth of 11.30%. My Heart Bodibra Group lags the pack with its lower growth rate of 12.71% over the past year, which indicates the company will be growing at a slower pace than its luxury goods peers. As the company trails the rest of the industry in terms of growth, My Heart Bodibra Group may also be a cheaper stock relative to its peers.
Is My Heart Bodibra Group and the sector relatively cheap?
The luxury goods sector’s PE is currently hovering around 16x, relatively similar to the rest of the Hong Kong stock market PE of 14x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 4.43% compared to the market’s 10.00%, potentially indicative of past headwinds. On the stock-level, My Heart Bodibra Group is trading at a lower PE ratio of 11x, making it cheaper than the average luxury goods stock. In terms of returns, My Heart Bodibra Group generated 64.53% in the past year, which is 60.10% over the luxury goods sector.
What this means for you:
Are you a shareholder? My Heart Bodibra Group has been a luxury goods industry laggard in the past year. This is possibly reflected in the PE ratio, with the stock trading below its peers. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto My Heart Bodibra Group as part of your portfolio, or maybe increase your holding. If you’re bearish on the stock, now may not be the best time to sell!