Pitch: A bet on Inditex, the largest apparel retailer in the world, returning to historical trading multiples of 25x earnings. This is a high-quality business with a +20% ROE. Russian impact (c. 10% of EBT) is significant but manageable. Speedy growth of Chinese fast-fashion online competitor Shein is a threat, but as the industry is still very much fragmented with Inditex having only 2% global share, there is plenty of room to grow.
Valuation: Trades at 16x forward FCF vs historical 25x. Projected to reach $40bn in sales by 2025 (+50% growth from today). With EBT margin of 19% this results in $6bn of FCF, or $50 target at 25x multiple.
Exp. gain: +150% in 4 years.
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