STOCKS NEWS EUROPE-Good prospects for luxury sector in 2013-Nomura

Thu Nov 15, 2012 5:49am EST

The luxury sector valuations in Europe remain attractive despite forecasts of a moderate earnings growth environment in 2013 and the sector is likely to offer value to longer-term investors, Nomura says.

"We see the sector as attractive for medium- to long-term investors given ongoing high rates of return, global exposure and strong pricing power, with an improvement in China a potential boost in the latter part of (2013)" it says in a note.

Nomura's key stock picks are French retail and luxury group PPR and German group Adidas, saying both companies continue to pursue individual strategies and demonstrate market share gains as well as margin potential.

It says that watches remain under pressure in Asia, owing to more moderate levels of gifting.

"But structurally, we see Richemont and Swatch as well positioned - the former for its high returns, pricing power and cash generation, and the latter through regulatory benefits and a diverse brand portfolio."

Reuters messaging rm://atul.prakash.thomsonreuters.com@reuters.net