Whoa! Stand back here folks. Richemont have produced a sparkling trading update this morning, that indicate a likely increase in net profit of approximately 30 % compared to the prior year. Sales increased by 14 percent for the year, whilst in constant currencies only increased 9 percent. That was the benefit of a weaker Euro. As that crazy Jim Cramer says in the intro to his show, there is always a bull market somewhere. So, net profits are expected to increase by around 30 percent, so somewhere around 2 billion Euros for the full year.
That is almost double of what they did in 2011, so they certainly had a cracking year. Around 3.57 Euros worth of earnings per share (remember that the GDR here is one tenth of the Swiss listed entity) which translates to (at 12.08 ZAR to the Euro) 43.14 ZAR a share. Or at one tenth of that, 4.31 ZAR. The stock is understandably flying this morning, up nearly 6 percent in Jozi, at around 71.35 ZAR. 16.5 times historic multiple. For a company growing profits at around 30 percent, that is hardly demanding. A simple PEG ratio (Price to earnings ratio divided by annual EPS growth) puts that metric at 0.55. That is cheap, but their forward earnings growth at that rate is not clear. Either way, this is pleasing for shareholders.