These factors could hurt Samsonite's performance in 2013

Shady days ahead amidst 22% gain forecast.

According to Maybank Kim Eng, it views the movements of the Indian rupee, Euro and Korean Won since 2H12 to be a boon for Samsonite, while anticipated prolonged Yen weakness will hurt its profitability and top-line upon translation and transaction risks.

Maybank adds, better-than-expected profitability and sales amid product portfolio and multi-brand diversification may likely create an upside risk in our FY13/14 forecast. Other key risks are intensified market competition and an unexpected slowdown in the global economy.

Here's more:

Catalysts emerging. We like Samsonite for its strong earnings visibility given rapidly-growing sales in Asia and market share gains in the developed world.
Operating leverage and higher sales efficiency should support our marginsimprovement belief.

We also expect upcoming results to support our re-rating call as catalysts emerge. Currently a BUY with TP of HKD21.2, pegged at a global peer average of 18.7X FY13PER.

FY12 preview. We project adjusted net profit to grow by 22% YoY on the back of 13% top-line growth. 

Adjusted EBITDA margin should increase by 28bps YoY to 16.1% despite slight sales-mix-driven margin erosion in view of fast-growing “American Tourister” sales.

Nonetheless, we expect overall A&P ratio to trend downward as the company reallocates its marketing resources in different markets. Look for better sales growth QoQ in 4Q12, contributed by various successful localised product launches. 

Key markets’ performance. Key markets of China, Japan, South Korea and North America should post satisfactory revenue growth while India should be in negative growth territory with a temporary volume decline, given a big ASP hike in end 2Q12 and pricing discounts by local competitors.

Expect Japan’s growth to normalise in 2H12 given a low base resulting from the 2Q11 earthquake. South Korea should report impressive numbers as new products are well-received.

And in North America, growth rate should hold at a high double digit, thanks to previous year’s POS additions and benefits of M&As. Elsewhere, European sales will no doubt be weak with the exception of Germany.