L'action LVMH Chute en Bourse, opportunité ou danger ?

0:00 Hello investors, I hope you are well and welcome to this new episode in which we will talk about LVMH because it has corrected in recent months and I am still receiving messages about it. This is a company that has been talked about on the channel for some time. We started at the time when it was well over €600. I didn't want to touch it at the time, I found it too expensive. Then, we remade a video a little over 2 months ago. started to arrive at levels that I found very relevant. The conclusion was again that I was patient because I was not necessarily comfortable with qualitative analysis. And today, the company corrected it again. We are at €465. Which doesn't shock me at all either, because if you look at the videos I made at the time, I found the valuation too expensive. On the other hand, I tell you, I already give you a little bit of the conclusion in advance in this video.

0:45 We are at levels which I think are beginning to be relevant. In any case, my quantitative analysis that we will look at together. I will present to you the new figures that I have updated. We're going to look at the company's finances and so on. Uh overall the conclusion is changing and I finally understand the valuation at these levels. So there you have it, it's going to be a video that's fun because we're talking about a great French company that for a very long time was too expensive for my taste and I think that's changing and it's going to make me happy to make a video about a French stock and I think that you can hear it in my voice. These are videos that are fun to make. So we will first look at the decline. We're going to re-explain a little bit what happened and why. I will show you my updated figures . There you have the old ones, my old price to pay, and I have a new one that has gone down. And we will end with my conclusion. Obviously, as

1:31 usual, it's about investment advice. I'm just sharing my perspective on things with you and everyone will make their own decisions with their money. LVMH is a very long story for me. I remember buying two shares in May 2019 when I was just starting out. Just before that, I had never touched individual stocks. It was my first and I bought two shares for 675.69 cents. I went to look for the documents from the time of my first broker. So it was €337 each and I sold them a few months later for €951.32 for both. simply because I realized that I had bought them without knowing why I had bought them. It has changed since then, though. Uh, I've been diving back into the title for quite some time now. Uh, you see that it is soon at -50% compared to the highest point and as I was telling you, we had talked about it in particular around October-

2:18 November 2024 at more than €600. There were a lot of questions I touched on at the time. You have the videos on the channel to review all of this and as such never say never uh because we come back to levels it is there at the level of 465 € which according to my analysis besides well you already have it and those who want to stay to see in more detail all my figures do not hesitate. and for the others, you already have the conclusion uh under 517 € uh honestly I'm starting to be on a file which if the qualitative part uh in my analysis is validated also because there we are going to talk mainly about figures in this video, well clearly it could be an interesting file. Obviously for the qualitative part, go back and watch the video if you want that I made in October 2024 in which we go into much more detail on the business itself. And today, we're mainly going to do numbers. And to know that this new price to pay, in fact, I updated my figures, you

3:04 see here, 3 weeks ago, I continued to work on the file in the member area. And by the way, for all those who are in the members' area, don't hesitate to go see the latest videos. I post to you every Monday about what I'm doing right now. And for anyone who wants to join us in the program, you have the first link in the description and I'll also tell you more about it at the end of the video. So LVMH, just a quick reminder, is the world number 1 in luxury with a portfolio of more than 70 brands for the entire quality section. As I was telling you, go watch the video I made for you here in October and we'll get straight to the numbers. So there you have the LV course as I showed you which was really well corrected. We are soon returning to levels from before the March 2020 drop. I do n't know if we will go that low. Besides, I will tell you in conclusion, nothing is impossible. No one can know

3:50 the low point. There is a time when I like to apply a strategy which is that I know how much I want to pay a company and as long as we are not at that price, I am patient. And never say never, because one day we can get there if the valuations are exaggerated. And honestly, I think that at the time at €900 obviously the valuation for me I found it exaggerated, I had already told you and even at 600 it was too high and I really started to take an interest in the file when it went below 550,500 and you have my price to pay today which has also compressed a little to 517 and in fact it has compressed why? Is turnover compressing and margins too? Because yes, since the beginning of this video, I've been telling you that I see positive things, that we 're finally at a level that interests me. However, I'm still going to put a lot of caveats in this video. Correction takes place for good reasons. We will see it in the numbers. It's not by chance either.

4:35 And I will talk about it in conclusion, business will have to pick up again because otherwise the decline could continue. And obviously, in an investment thesis, we also need to be convinced that management will manage to put the right actions in place to get the fundamentals of the business going again. Speaking of the business model that needs to restart, we'll start at the very top of the income statement with our turnover. You see that this one in 12 months rolling has started its decline for 2 years. And if I put us in half-yearly figures, the company publishes every half-year, you see that overall between the end of 2022 and the beginning of 2024, we made 42 billion in turnover and 42 billion in turnover. And there, we redid 43, knowing that we had done a 44 at the end of 2023. So overall, the turnover has been stagnating for 5 semesters and over 12

5:21 rolling months, it is still on a downward trend. However, if we look back, we have started to rise slightly again. Now, we're going to look at the longer term because in the long term, we know that consumers are suffering across the world, particularly in Asia for LVMH, and also for quite a few in the luxury sector. Other luxury companies were discussed on the channel. Uh, on the other hand, if we look at, let's look at 10 years of compound annual growth, the business has still achieved almost 10% growth in turnover, which is really not negligible. And if I take away the last two years, we have even achieved more than 12%. So it's a business that has had a nice growth trend over the long term . The next step for me in this type of business is obviously to look at the margins. For what ? Because in luxury, in general, we have a capacity to set prices which is quite high,

6:06 quite simply because we sell a high-end product and it costs us much less to manufacture and therefore, inevitably, that gives us large gross margins. Gross margins, one thing I'll really be watching is whether they compress, and we see here that they tend to compress a little bit . We are not yet at the levels of 2020 where we were at 61.93. However, I want to say, yes, we went from 68.85% gross margin to 65.27. We have nothing to complain about, we still have very high gross margins. And gross margins are so important to me because it means that for every €100 of product sold, we still have €65 left in our pocket, just after removing the manufacturing costs and all the costs directly related to that product. On the other hand, we still have a lot of money left to do marketing, to pay administration and so on and then have a

6:52 net margin. And we find this very clearly here since the company's margins as well as its cash flow margins are positive. You see that we have a net margin which is currently a little over 12%. So obviously the historical median is higher at 13.80 and that's normal since we've seen that recently gross margins have fallen and net margins too. The whole sector is suffering. And in terms of available cash flow margins , therefore the self-financing capacity and also the cash available to pay dividends and so on since the company pays a dividend, well we see that we are also in the positive. So despite the difficulty in turnover which is real, we see it here, you see the slowdown that we had and I showed it to you before, we are holding the margins for the moment and clearly if the margins were to compress strongly, it would be a fairly negative signal for me, uh, on the business and

7:37 fortunately for the moment this is not the case. And obviously, this largely involves the brand image which must be preserved, I mean across all the brands they have in their portfolio. And besides, we have seen it clearly in all companies. For example, we can think of Kering and Gucci. When you have one of your main brands that has problems, well, it's instantly reflected in the company's numbers. Touch wood. For now, this is not the case with LVMH and historically, it is a company that has managed its brand images well. There have been rumors and fears that have spread, I have seen on social media and even in general, the consumer is suffering a lot in Asia. For now, it's not reflected in the figures. And once again, we do quantitative analysis, analyzing the business model, brand image management , management, and so on. That 's what the qualitative will tell you. We will have to form our own convictions and we will talk about it again in the conclusion. As

8:23 we said, the company pays a dividend, you will find it here. They are quite capable of paying it. We see that they distribute no less than 50% of the flow of valuables. And the payout ratio, uh it's at 52, even if you know that I prefer to look at the distribution rate, uh of the available network flow because looking at the profit distribution rate is relevant for me since what we pay in the end is cash. And so if we want to look at where the cache is coming from, let's look at the treasury flows. I also wanted to show you that one point to note, look at the dividend, they have slowed down its annual increase and besides you will find it I think in the figures since over 5 years compounded, it has increased by more than 15 % per year and over 3 years only 9%. And that shows that management is fully aware that it has had difficulties with the business and with

9:10 margins and therefore they are increasing the dividend less. Kudos to management for handling this well. Speaking of the ability to pay, we will immediately look at what is happening at the level of cash flows. So we're going to take the free cash flow and the free cash flow from which we 've subtracted the share compensation intended for employees, management, and so on. You also see just a little information on the capex level. We are still well beyond the cash flow of operations. So, in my opinion, it's a company that won't have too much difficulty maintaining positive free cash flow in the long term, which is a pretty good sign. Then we will be given the dividend that they paid. We see that they are doing a bit of action buying. I'm not going to post it because it looks pretty weak, but it 's there anyway. And they seem to be paying us back a little bit of debt recently. However, I remember that

9:55 the company still has quite a lot of debt. We're going to put the total cash and uh the debt. we're going to focus, well, the short term is quite stable, so we're still going to focus mainly on the long term. So if we look at all of this, the company can pay its dividend. You see at my pointer here that the 8.69 billion euros of cash flow to cover the 2.88 paid in dividends and the rest of the recent cash flow came and increased the cash position. And if we take long-term debt versus cash, we have roughly twice as much debt as we have cash. And if we took the trieau flows and entered the dividends, we can do 9 - 3, that will give us 6 x 5 30 6 x 4 24. It would

10:45 take us a good 5 years to repay this debt if we concentrated on it without touching the cash. And if we touch cash, it will go even faster. So the company is in a situation that doesn't worry me too much, even if it's much less pretty than it was 10 years ago if you look back then, but again, if they raised cash to make acquisitions to get through a difficult time, those are not things that worry me. If they had raised cash to pay a dividend when they couldn't pay it, I would be much more worried. and you have companies, uh, that I've already talked about on the channel, which are raising debt to pay dividends. And that, for me, is completely unacceptable. This is not at all the case with LVMH and honestly I did n't think that would be the case since it's a well-managed business. He thinks long term in my opinion he doesn't think short term. And I sometimes talk about this on the channel, but in fact,

11:32 very often you can see the quality of management through the figures without even listening to what they say. Uh, the numbers often speak for themselves and here the numbers speak the same. Even though the company is going through a difficult period, they seem to be managing, making the right decisions, and that's nice to see. Now, how much will this business cost? So, personally, I have made my projections, but first, we will look at the price ratios all the same. It's interesting to see where we are in relation to history, even though obviously price ratios only show us the past and don't show us the future. For that, for me, you have to estimate where the business will be in the future by projecting the turnover and margins and updating them in the present. We'll do that later, but I still like to look at historical prices. So, we're going to set a price in relation to turnover and we're also going to set a PER and a price to free cashflow. Price versus cash flow . If we look at them

12:17 historically, you have the medians each time, we are below the median in relation to the price in relation to the turnover over the last 10 years. This is also the case with respect to price versus cash flow versus PER. We're a little bit into that. So if I look at these figures, it tells me something quite interesting, which is that in fact the company was very, very expensive for 2 or 3 years. We'll find it on the graph up there. And it's funny because there are videos on the channel where several times I mention that I find it too expensive and I think that the market found it too expensive too since we had a huge compression of price ratios and you will see it here eh. Look, if I put us at the end of 2020, beginning of 2021, we had a price to turnover ratio of 5.78, a PER of 54 and a price to network flow ratio of 30. Then, these

13:02 ratios compressed, you will find it here. Look at the peak we had on LVMH in terms of the share price, that was at the beginning of 2023. And if we go back to my values, it's a super interesting exercise. We see that the values ​​are starting to rise at this point, taken in relation to the turnover at 5 whereas we had compressed a little in 2022 and I think that we will find it again at the level of the share price. Yes, look at 2022, we had dropped back down even though we were so high in valuation around 2021. And I wouldn't be surprised, turnover and margins must have started to drop here. End of 2023, beginning of 2024. We'll go back and see it together. Uh, wait, I'm getting the right chart. I'm trying to do it for you live. I find it very interesting. The turnover, I

13:48 will put us in quarterly. We'll be dropping out from the end of 2023. Look, end of the 2023 quarter, 44 billion and then beginning of 2024, 42 billion. Start of the decline in turnover. And what did we say before? When did the decline start? I told you about this peak, March 2024, the start of the big decline. No wonder, everything is aligned and obviously, I want to say, once it's over, it's super easy to say. Of course, at that time, the growth in turnover could have continued. We couldn't have known. All we could do at the time was look at valuations and estimate where we were. And that's exactly what I do in my file. There is a moment, uh, I am obliged to put in growths and if I had made my file at the time by putting even 10% growth in turnover over the

14:34 next five years in compound and good margins, we would not have reached more than €900. Besides, we could have fun doing it before I tell you about my file. So, if we take the turnover when we were doing extremely well in 2023, we see we are at 86 billion. Well, 2024, 84 billion overall, we'll start from that base. And if instead of not having growth, I gave us 10 % every year, I try to directly hide from you the value that I would have had at the time. Could maybe even be 12% if we wanted to be generous. So there you have it, at the height of euphoria, starting from a turnover, we're going to do it again together. This video is going to be interesting as I do some things live. I like it. Well, we were starting from 85, 86 billion. Uh, you'll excuse me for the little billion less. And if I gave us 10, it might even be 12% if we're going to be

15:21 ultra ultra generous, it would have paid 700,650 and at the time, well, it would have been I would have paid it according to my figures, everyone does what they want and their valuations, I try to be rational to have my strategy and to know how much to pay for the title. And he paid himself yeah 900. And today, uh now, if I update my figures , my real figures that I present to you in this video which is that we have a drop in turnover in 2024, honestly all of 2025, I see the turnover stagnating at best. I put us at zero growth and then if we manage to get back to 5 % then 8% in the very long term, that seems reasonable to me because I think that LVMH and that again, you have to fill in your own figures, it's your analysis that will tell you and I think you have to do your analysis and write it down. We'll talk about it again in the conclusion because if we copy what

16:07 others do, others won't always be there and in the end if we didn't write down why we did something at the time we don't learn. Anyway, that was an aside. Overall, if I use my own figures, which I think are still rather on the cautious side, we arrive at a price to pay today of a little over €500, and therefore € 464. Clearly, I think that quantitatively, I am no longer shocked. At the time, as I told you, at those levels, even 620 in October 2024, there was no way I was going there . Between 620 and 564, there is still mo- 25% and there we still arrive at levels that I find much more coherent. Which will bring us to my conclusion and besides, I did n't expect at all that the video would take this format of analyzing what happened in the past. But

16:53 since we had already made other videos, one in April and one in October where I was more into numbers, I wanted to show you the reasoning a little bit because I find it also educational, in quotation marks, to show what my reasoning is and then everyone will do their own reasoning and we can pick and choose ideas from left to right to ultimately improve. a conclusion which is similar to the two before with the only difference that the share price has corrected a lot and you will understand why I say similar but at the same time now I say that I could be interested in it whereas at the time not on the quantitative and that is what has changed if we have a return of growth and a maintenance of margins in the medium and long term that is what I am doing here the return of growth from 2026-2027 and margins maintained as I put it here on the screen and well the price does not shock me anymore once again I put a flat if we have a return

17:38 of growth and a maintenance of margins. If turnover continues to decline, it's a different story. And that's why I've come to the same conclusion that I gave you at the time, apart from the fact that now I find the price relevant, it's that the investor must also form an opinion on the qualitative part of the analysis and therefore the business. Will the luxury sector be profitable in the future? Will the economic environment improve? which is suffering enormously in Asia, particularly in China. In the United States, things are a little better, but the consumer is still suffering. We have intrinsic risks. The CEO who will one day have to step down and the long-standing CEO has managed the company really well. Brand image, can we have brands that suffer from bad buzz and so on? Communication problems are intrinsic to the luxury world, the political impact and so on. So clearly, it could still go down

18:23 or go up again. It is impossible to know the low points. I ca n't say where we'll be in a week, in two weeks, in three weeks. On the other hand, in the long term, I can form an opinion on the value of the company based on my analysis. And that's what I do. That's why I always use a strategy to stay rational. I write everything. So, I even make YouTube videos about it, that's the next step. But suddenly, it allows me to record everything and whether I was right or wrong, we find the videos to see what I said at the time. And it also allows me to make a lot of personal progress and, what's more, it allows me to write everything down. Then, once I am at a price that interests me and I have validated the quality, I can start buying until I reach a desired position to manage my risk. Ultimately, a written and precise analysis because if it decreases further, negativity and fear can clearly spread. And that's where you have to know your investment test to

19:09 hold on emotionally and, uh, like that, in all cases, you become independent and you progress. We're done for today. Uh video that I really enjoyed making. I went in all directions. You'll excuse the tangents, but in the end it was really interesting to come and find out what happened at the time, to look at the figures. Indeed, it's a little bit tough at the moment, but uh the valuation for me and the share price is reflecting uh these difficulties and there is clearly for me perhaps an opportunity if we validate the qualitative too and that will be specific to each person of course. And if you want to have a little more qualitative opinion of my analysis, go back and watch the videos from that time in which I talk much more in depth about the business, their geographical distribution, the risks and so on, much more about the qualitative whereas today we have done figures. And to finish the

19:55 video, if you want to go further and join us in the program to learn how to conduct analyses but also have access to all the video training, my portfolio, my purchases, my sales, the videos that I make each week, the analyses that you saw here, my prip and well quite simply it's something that we did 3 weeks ago, 3 weeks ago here where I updated my figures. I actually do work sessions that I record much more raw, in which I share what I think I'm doing at the moment, as well as the entire training and so on. This was a pretty long video. In any case, I hope that it will have interested you. I really enjoyed making it. It's nice to see a beautiful business historically managed by management that has met but is still fighting. This is evident in cash flow management. They can pay the dividend and so on. They make a lot of good decisions, I feel. They're not out of the woods yet. The decline may not be

20:40 over, but personally, I am much less worried than I was during the valuation period. Now, well, it all depends on future turnover and margins. His person wants to foresee. If the turnover and margins pick up as I put in my analysis and I think that it is entirely feasible on the part of the management, uh, if the business is well managed, well we have a price that interests me. On the other hand, obviously, if turnover continues to fall and margins are compressed, the story will be different and only your analysis will tell you that. It was a long video, I repeated myself a little but that's okay, it's important. I wish you a great day and see you soon for the next episode.