Home » Investors could have ‘cashed in big’ by buying shares in South African mogul Johann Rupert’s Richemont

Investors could have ‘cashed in big’ by buying shares in South African mogul Johann Rupert’s Richemont

by Omokolade Ajayi

Swiss luxury goods holding Richemont, founded by South African billionaire Johann Rupert, is one of Africa’s leading corporate behemoths as far as returning gains to shareholders is concerned.

Richemont, the owner of Cartier, Bodino, Jaeger-LeCoultre and several other luxury brands is one of the most talked-about groups in 2021, as institutional investors with a substantial stake in the luxury goods maker believe it can do more in terms of financial performance and value creation.

Recently conducted research by Billionaires.Africa revealed that the group’s Class-A shares publicly traded on the Johannesburg Stock Exchange and SIX Swiss Exchange experienced a robust double-digit price surge in the period under review.

Since the year began, Richemont shares have increased from R1,311 per share ($81.1) on Dec. 31 to R2,397.40 ($148.2) on Nov. 26, accruing gains of 82.9 percent for shareholders.

As a result of the price surge, the manufacturer’s market capitalization surged by R567.1 billion ($35.06 billion), from R684.34 billion ($42.31 billion) at the start of the year to R1.25 trillion ($77.3 million) as of the time of writing.

A $10,000 investment in Richemont on Dec. 31, 2020 is today worth $18,372

Local or foreign investors with access to Richemont shares on the Johannesburg Stock Exchange would have seen an 82.9-percent gain since the beginning of the year if they had purchased shares in the luxury goods company in December 2020.

This suggests that a $10,000 (R161,741) investment in Richemont last December is now worth $18,372 (R297,136), nearly two times the initial investment.

Rupert, who founded the company in 1988, has seen his net worth surge above the $10-billion mark this year due to increased market value of his stake in the Swiss luxury goods group.

Rupert is now the wealthiest man in South Africa after his net worth surged past Nicky Oppenheimer.

What’s worth knowing about Compagnie Financière Richemont

Richemont, in the first six months of its 2022 financial year, which ended on Sept. 30, has recorded strong double-digit increases across Maisons, businesses and channels, causing its sales to rise by 63 percent from €5.48 billion ($6.18 billion) last year to €8.91 billion ($10.05 billion).

The strong double-digit growth across all business segments, channels and regions compared to the prior year and improved profit margins caused earnings to surge by 686 percent from €159 million ($179.4 million) to €1.25 billion ($1.41 billion).

Richemont has recently found itself in difficult straits as U.S. hedge fund Third Point Management pressured the company to reduce its exposure to loss-making subsidiaries, specifically YOOX NET-A-PORTER (YNAP), to improve its overall financial performance and valuation.

The fund and another long-time shareholder, Artisan Partners, believe the luxury goods group has a low valuation compared to competitors such as French luxury goods company, LVMH.

The company revealed that it is in advanced talks with Farfetch to enhance their partnership, as it moves to leverage Farfetch technology to accelerate its new retail developments.

In line with the key agreement discussed under the partnership, Richemont will sell a minority stake in the loss-making YNAP to Farfetch to reduce its risk exposure to the online retailer and improve its overall valuation.

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