If only French banks had the allure of a Parisian maker of $8,000 handbags.
The CHART OF THE DAY shows how Hermes International SCA, maker of Birkin bags and the best performer this year in France’s SBF-120 Index, has overtaken Societe Generale SA, the country’s second-biggest bank, by market value. While lenders struggle with Europe’s debt crisis, Chinese consumers are buying high-end consumer goods and LVMH Moet Hennessy Louis Vuitton SA is acquiring as many Hermes shares as it can find.
Hermes’s market value is 55 percent greater than Societe Generale’s, even though it has 5 percent of the staff and 8 percent of the revenue of the lender, according to Bloomberg data. Investors are paying 54 times reported earnings for Hermes compared with 5 times for Societe Generale.
“Hermes market cap is valuing each and every one of its very competent staff at a mere 3.3 million euros ($4.8 million) per head as it is indeed extremely demanding to turn 700 odd bits of leather into a useful bag,” said Pierre-Yves Gauthier, head of research at Alphavalue SAS in Paris. “SocGen employees have a history of breaking the bank so they are worth only about 110,000.”
Each Hermes employee is valued at 30 times every one at Societe Generale, the Paris-based bank that in January 2008 accused one of its traders, Jerome Kerviel, of causing a 4.9 billion-euro trading loss.
Hermes has rallied 70 percent this year as LVMH increased its stake in a company whose freely traded shares are likely to be as low as 6 percent of issued stock, according to Oddo Securities. Societe Generale has plunged 42 percent this year.