Prada: to Ipo or Not to Ipo: That Is the Question, Again
The 15th
Financial Case Analysis Contest
Analysis Report
Case Name： PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN
Report Title： SWEET ARE THE USES OF IPO
Team Name： WINDTRACKER
DATE: 16/12/2012 Contents
ABSTRACT 1
1. Macro and Industry Analysis 3
1.1 Financing Environment 3
1.1.1 International Monetary Market 3
1.1.2 International Bond Market 7
1.1.3 International Stock Market 9
1.1.4 International Private Equity Market 10
1.2 Industry Analysis 10
1.2.1 Industry Life Cycle Analysis 11
1.2.2 Five Forces Analysis 13
2. Financial Analysis and Forecasting 20
2.1 Financial Analysis 20
2.1.1 Profitability Analysis 20
2.1.2 Debt Solvency Analysis 24
2.1.3 A Close Look at Prada’s Cash Flow 27
2.2 Forecasting and Capital Needed 33
2.2.1 Forecasting Pro Forma 33
2.2.2 Capital Needed 35
3. Financing Alternatives Selection 38
3.1 IPO Alternative 39
3.1.1 Current Environment 39
3.1.2 Pros and Cons 44
3.1.3 Simulations 46
3.1.4 Impact on Future Growth 53
3.2 Strategic Partner Alternative 57
3.2.1 Current Environment 57
3.2.2 Pros and Cons 58
3.2.3 Simulations 61
3.2.4 Impact on Future Growth 74
3.3 Debt Alternative 81
3.3.1 Current Environment 81
3.3.2 Pros and Cons 86
3.3.3 Simulation 88
3.3.4 Impact on Future Growth 93
3.4 Other Financing Alternatives 96
3.4.1 Commercial Paper 96
3.4.2 Project Financing 97
3.5 Financing Method Comparison 98
3.5.1 Immediate Effect Comparison under TAGCO 98
3.5.2 Long-term Effect Comparison under FRICO 100
3.6 Recommendation on IPO 103
3.6.1 Tax-related Recommendations 103
3.6.2 Control-related Recommendations 104
3.6.3 Other Recommendations 106
4. Risk Analysis 107
4.1 Macro-economy Risk 107
4.1.1 Interest Rate Risk 107
4.1.2 Exchange Rate Risk 108
4.1.3 Tax Rate Risk 109
4.2 Operation Risk 110
4.2.1 Counterfeit Product Risk 110
4.2.2 Brand and Reputation Risk 110
4.2.3 Instability of International Market Risk 110
4.2.4 Key Person Risk 111
4.3
Financial Case Analysis Contest
Analysis Report
Case Name： PRADA: TO IPO OR NOT TO IPO: THAT IS THE QUESTION, AGAIN
Report Title： SWEET ARE THE USES OF IPO
Team Name： WINDTRACKER
DATE: 16/12/2012 Contents
ABSTRACT 1
1. Macro and Industry Analysis 3
1.1 Financing Environment 3
1.1.1 International Monetary Market 3
1.1.2 International Bond Market 7
1.1.3 International Stock Market 9
1.1.4 International Private Equity Market 10
1.2 Industry Analysis 10
1.2.1 Industry Life Cycle Analysis 11
1.2.2 Five Forces Analysis 13
2. Financial Analysis and Forecasting 20
2.1 Financial Analysis 20
2.1.1 Profitability Analysis 20
2.1.2 Debt Solvency Analysis 24
2.1.3 A Close Look at Prada’s Cash Flow 27
2.2 Forecasting and Capital Needed 33
2.2.1 Forecasting Pro Forma 33
2.2.2 Capital Needed 35
3. Financing Alternatives Selection 38
3.1 IPO Alternative 39
3.1.1 Current Environment 39
3.1.2 Pros and Cons 44
3.1.3 Simulations 46
3.1.4 Impact on Future Growth 53
3.2 Strategic Partner Alternative 57
3.2.1 Current Environment 57
3.2.2 Pros and Cons 58
3.2.3 Simulations 61
3.2.4 Impact on Future Growth 74
3.3 Debt Alternative 81
3.3.1 Current Environment 81
3.3.2 Pros and Cons 86
3.3.3 Simulation 88
3.3.4 Impact on Future Growth 93
3.4 Other Financing Alternatives 96
3.4.1 Commercial Paper 96
3.4.2 Project Financing 97
3.5 Financing Method Comparison 98
3.5.1 Immediate Effect Comparison under TAGCO 98
3.5.2 Long-term Effect Comparison under FRICO 100
3.6 Recommendation on IPO 103
3.6.1 Tax-related Recommendations 103
3.6.2 Control-related Recommendations 104
3.6.3 Other Recommendations 106
4. Risk Analysis 107
4.1 Macro-economy Risk 107
4.1.1 Interest Rate Risk 107
4.1.2 Exchange Rate Risk 108
4.1.3 Tax Rate Risk 109
4.2 Operation Risk 110
4.2.1 Counterfeit Product Risk 110
4.2.2 Brand and Reputation Risk 110
4.2.3 Instability of International Market Risk 110
4.2.4 Key Person Risk 111
4.3