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For the exclusive use of JATIN CHAWLA at TVF CAPITAL ADVISORS PTE LTD on 16-Jun-2025 luca.solca@bernsteinsg.commaria.meita@bernsteinsg.comyi-peng.khoo@bernsteinsg.comeric.chen@bernsteinsg.comPORTFOLIO MANAGER'S SUMMARYHermès stands out as the most desirable luxury goods brand.That is a great position tohave. When things are bad and people cut their shopping lists, Hermès would be the last brandmost people will cut. When things are good, Hermès would be the first brand people will flockto. Combine this with a deliberate choice to sell — at least in some categories such as leathergoods — less than the market would take, and you have one of the most stable and least volatileperformers in the market. This is important, as we have shown that the more stable, consistent,and predictable the performance, the higher the PE multiple associated with the stock.Hermèsis focused on organic growth.Building scale through M&A comes at the expenseof ROIC, and ultimately sacrificing TSR. The Hermès valuation makes sense not only in termsof stable, constant, and predictable performance, but also in terms of providing the bestROIC improvement over the past 20 years. LFL growth, ROIC improvement, and superior TSRperformance go hand-in-hand.LVMH’s failed attempt to acquire Hermès in 2010 means growth remains the priority.Hermès is now a big target for anyone, even if most of the family hadn’t committed to keeping itsshares in a holding company for years to come — high dividends offer another great incentive tostick together and stay independent. Ubiquity is not a concern: the visibility of Hermès handbags— while moving higher in the past 10 years — is still very materially below its competitors.Hermèsis unique in many respects.Upstream integration into manufacturing gives it a majorsustainability advantage. The decision to share with all employees part of the profit in the post-pandemic boom is a good example. Add to this a focus on repairing its products to extend theirlife, and you have a virtually perfect sustainability champion.Hermès appears to be high-end in the eyes of consumers (and investors), whileaccommodating a very large consumer audience.Beauty and (costume) jewelry have come tocomplement ties, scarves, and belts that aspirational consumers can buy to their hearts content,unlike at high-end niche players — think Loro Piana or Brunello Cucinelli. This provides a steadierbalance, we believe: aspirational consumers go back to the brand in good times, just when richconsumers may be setting their sights on more expensive products and services.Where could things go wrong?Hermès is still exposed to exotic skins, but processes andcontrols have been tightened. Experiments are well under way to employ alternative materials.The practice of “qualifying” for a Hermès bag has generated a parallel market. Hermès mayreduce this by reinforcing the desirability of other categories that would sell in their own right —as it has done in ready-to-wear (RTW) and footwear, but could do more in watches, for instance.HERMÈS: ORANGE IS THE NEW BLACKBOOK +41 582 723 126+44 207 170 0540+44 207 676 6822+852 2123 2628June 17, 2025 1 Luca SolcaMaria MeitaYi-Peng KhooEric Chen 2HERMÈS: ORANGE IS THE NEW BLACKBOOKFor the exclusive use of JATIN CHAWLA at TVF CAPITAL ADVISORS PTE LTD on 16-Jun-2025 TABLE OF CONTENTSSIGNIFICANT RESEARCH CONCLUSIONSAN INVESTMENT FOR ALL CYCLESHermès has historically delivered both relative and absoluteoutperformanceWHY FERRARI AND HERMÈS ARE SIMILAR…… and why Sergio Marchionne was rightTHE HERMÈS MAGIC FORMULAFive core attributes that set Hermès apartLUXURY IS THAT WHICH YOU CAN REPAIRTaking the artisan model to another levelAN UNDERAPPRECIATED ESG LEADER IN PUBLIC RANKINGS’ EYESAn ESG leader that has talked little but done a lotTHE UBIQUITY CALCULATIONComparing Hermès, Louis Vuitton, Gucci, and PradaTHE “ULTIMATE BRAND CHOICE FOR LIFE”The three brands that people want the most if money were no objectHERMÈS: ORANGE IS THE NEW BLACKBOOK 15234153657989 EXHIBIT 1:Rating and target price11 Jun 2025TTMAdjusted EPS AnnualizedOrganic GrowthAdjusted P/E (x)ClosingPriceRel.TickerRatingCurPriceTargetPerf.Cur2024A2025E2026E2024A2025E2026ERMS.FPOEUR2,360.002,800.00(6.4)%EUR43.8745.1554.2453.852.343.5EDM1,449.00O - Outperform, M - Market-Perform, U - Underperform, NR - Not Rated, CS - Coverage SuspendedSource: Bloomberg, Bernstein estimates and analysis.4HERMÈS: ORANGE IS THE NEW BLACKBOOKFor the exclusive use of JATIN CHAWLA at TVF CAPITAL ADVISORS PTE LTD on 16-Jun-2025 SIGNIFICANT RESEARCH CONCLUSIONSWithin the global luxury industry, Hermès has delivered best-in-class total shareholder returns(TSR) and share price performance over the past two decades.•Hermès is rightly seen as a defensive stock in a cyclical industry.Its position at the top ofthe leather goods pyramid and policy of selling less than the market can take provide a cushionduring demand lulls. Waiting lists can be tapped into when broader consumer demand w