Burberry Plc Research Report

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Burberry PLC Equity Research Report
Applied Financial Research
Weihan Wong CID 00607866 August 2010

Client Specification
The client is either a retail or institutional investor seeking to gain an in-depth insight into the profile, valuation, price, risks and growth potential of the equity of the specified company Burberry PLC. The client would expect an analysis of the firm’s business activities, its strategy and its future growth drivers. He would also expect a detailed analysis of the firm’s financial performance and a valuation of the firm using several different methods. The client also expects a brief industry analysis, identification of the firm’s main competitors and the firm’s relative operating performance to its competitors. A forecast of the financial performance of the firm over the next 3 years is also required. This forecast of the financial performance should be fed into the DCF analysis to produce an implied equity value per share. An Excel file with the DCF analysis should be provided. This file should include a sensitivity analysis on the implied equity value. Lastly, based on all the analysis conducted, the client expects an investment recommendation on whether to buy, sell or hold the stock of the firm.

Table of Contents
Summary ................................................................................................................................................. 1 Historical Background ............................................................................................................................. 2 Company Description .............................................................................................................................. 2 Revenue Analysis .................................................................................................................................... 3 Industry Analysis ..................................................................................................................................... 5 Competitors ............................................................................................................................................ 6 Strategy/Growth Drivers ......................................................................................................................... 6 Risks and Weaknesses........................................................................................................................... 11 Forecasts ............................................................................................................................................... 12 Valuation ............................................................................................................................................... 14 References ............................................................................................................................................ 16

BURBERRY GROUP PLC (BRBY.LN)
1. Summary  Rating / Valuation We rate Burberry as “Buy” with a DCF-based price target of 940p which is 12.8% premium over its stock price of 833p as of 20 August 2010. This is a reflection of strong share price performance and We view Burberry as a good quality company with high growth potential, a strong management team and balance sheet. Short term We expect further top-line growth from expansion and improved margins/productivity as restructuring savings are realised. Medium to Long term We expect strong top-line growth and further improvements in productivity and margins driven by:       

Equity Company name Company ticker Country Sector Currency Rating 12m Price Target Trading data Current share price NOSH (m) Market Cap. (£m) Free float Valuation date 52-week range Beta Source: Bloomberg and Capital IQ

Burberry plc BRBY.LN United Kingdom Luxury Goods GBP BUY 940p





833p 435 3,626 100.00% 20 August, 2010 457.70 - 891.50 1.04

New space growth: Increase in retail...
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