L'Occitane shares 973,
They rose sharply after the company reported strong sales in the nine months ended December, as analysts say business is already starting to return to normal post-pandemic.
Shares of the European beauty retailer rose 6.7% to HK$24.65 (US$3.15) on Wednesday, on track for its biggest percentage gain since November.
L'Occitane said on Tuesday it expects nine-month sales to grow to 1.915 billion euros (US$2.08 billion) from 1.61 billion euros a year earlier.
It attributed the sales growth to the continued outperformance of its Sol de Janeiro brand and the recovery of its Elemis line.
Sol de Janeiro's sales growth was supported by record holiday sales and successful new product launches, as well as expansion in online sales, Citi analysts led by Tiffany Feng wrote in a note.
L'Occitane's retail sales maintained steady growth of 4.0%, mostly contributed by its China business. The growth in online sales was partly driven by the recent launch of L'Occitane en Provence products on Douyin, China's version of Tiktok.
Rapid revenue growth in the fiscal third quarter ended December was better than expected, Citi analysts said in a research note.
They expect the company's business to largely return to normal in fiscal 2024 and 2025 after the pandemic affected profits in recent years.
The company updated its full-year sales growth guidance to more than 20% from 17%, driven by Sol de Janeiro's strong performance. Citi said they were less confident about the company's flagship brand, L'Occitane en Provence, partly due to increased marketing investments and weak travel retail.
The Elemis brand may also achieve significant sales growth in FY2024 amid a major marketing campaign, analysts said.
Citi maintained a buy rating on the stock and raised its price target to HK$29.50 from HK$25.50.
