Sell Prada (1913 HK): Accounting Inflates Margins and Facilitates Excessive Dividends

SELL Prada: There Is Little Value in This Brand. Fair Value HK$7.90

Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

Our thematic research refines our unique algorithms while our single stock research focuses on examples where we discover a significant gap between published accounts and business reality.

​Bucephalus Research Partnership:
- Is an independent fee-based research service
- Does not take proprietary positions, long or short
- Does not solicit business or fees from the corporates we review

Forensic Accounting

Bucephalus proprietary Governance, Accounting and Performance risk analysis:<ul>
<li>
G: Controlling shareholder. Excessive dividend pay-out ratio.</li>
<li>
A: Inventory obsolescence.</li>
<li>
P: Poor sales performance on many metrics. High inventory levels. Low margins.</li>
</ul><ol>
<li>GAP score: Bad vs. global luxury goods peer group</li>
<li>Dividend:   Unsustainable, as the business needs to conserve cash</li>
<li>Valuation:  High, even after years of poor share price and business performance</li>
</ol><hr><ul>
<li>Prada is cutting sales staff</li>
<li>Variable lease expenses…</li>
</ul>

Bucephalus proprietary Governance, Accounting and Performance risk analysis:

G: Controlling shareholder. Excessive dividend pay-out ratio.

A: Inventory obsolescence.

P: Poor sales performance on many metrics. High inventory levels. Low margins.

GAP score: Bad vs. global luxury goods peer group
Dividend:   Unsustainable, as the business needs to conserve cash
Valuation:  High, even after years of poor share price and business performance

Prada is cutting sales staff
Variable lease expenses…


Prada (1913 HK). Dividend at Risk. Sell. 41% Downside

Prada S.P.A.

Prada (1913 HK). Dividend at Risk. Sell. 41% Downside