Remy Cointreau (REMYF) shares surged as much as 10% in Paris Thursday, notching up their biggest intraday gain in more than two years, after the French spirits maker smashed third-quarter expectations with organic sales growth of 9%.
Remy stock hit a 12-month high of €90 ($95.90) in early trading before sliding back to €86.41 later in the session, up 5.6% or €4.63 on their Wednesday close.
The surge in revenues was underpinned by a 22.3% increase in financial year, third quarter sales of the group's Remy Martin cognac driven by strong growth in the U.S. and Russia and a rebound in Chinese purchasing, partly as a result of preparations for the Chinese new year this month.
Analysts had expected group-wide organic growth of closer to 3% to 4% and tipped cognac sales to grow about 9%.
Remy joins other luxury brands, including Cartier owner Richemont (CFRUY) , that have benefited from renewed Chinese demand for luxury goods following a years-long dip after Beijing cracked down on corruption and extravagant spending by government officials. Richemont last week beat analyst expectations when it posted a 5% increase in revenues, topping expectations of zero growth.
Remy has proven particularly successful at tapping Chinese demand as a result of new product launches, that have changed its product mix to target higher margin business, and through the opening of a new flagship 'Louis XIII' store in Beijing.
"These results continue to support our view that the cognac market in China has returned to growth and we note positive mix effects will continue to benefit margins," noted Goldman Sachs analysts, who rate Remy a buy with a 12-month price target of €84.
Paris-based Remy said it had shipped €212 million worth of cognac over the three months to the end of December. That was up from €192 million in the prior three months and up from €174 million over the three months to December 2015. Sale of its liqueurs and spirits brands, including the orange flavored Cointreau and Mount Gay rum, climbed a more modest 2% in the quarter, compared to the same quarter a year ago.