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Kri-Kri | Sweet scoop of growth; US entry bolsters outlook

Material profit re-set affirmed; strong profit compounder thanks to international expansion; Buy – KRI has been building on its dominance in the Greek market expanding its foreign footprint (intl sales >50% of the mix in 2024e), thus growing volumes strongly (20% in 2024e) while improving mix (e.g. protein yogurt in European markets, entry into the US through frozen yogurt). The latter is set to unlock additional growth avenues through PL partnerships. Following on from the impressive execution in H1 (EBIT +2% on very tough comps), we have lifted our numbers materially (14-17% at EBIT level in 2024-26e) envisaging EBIT settling at over €40m in 2024e. We model double digit EBIT growth for 2025e and high single digit thereafter, predicated on low-teens volume growth only partly offset by mild gross margin erosion. We envisage EBIT margins stabilizing near the 16% area in the coming years, lower than the ultra-high margins of 18.6% in 2023 but 2pps above the cross-cycle margins of food manufacturers thanks to Kri-Kri’s operational efficiency and continued focus on cost control. The sustainable high-single digit EBIT growth seems quite a compelling proposition, with risks to our numbers positively skewed in case of successful penetration in the US. With the stock still at €245m. Effectively, this boils down to FY24 EBIT slightly higher than the record 2023, and some 2.3x the respective 2019 level, a material profit reset vs prior years.

Internally funded augmented investment plan; scope for heftier cash returns – In light of the higher growth prospects, management has revised its capex envelope for the coming years guiding for €50m investments over 2025-2027e in order to double production capacity. These investments are set to be funded through organic OCF, thanks to Kri-Kri’s strong cash-generating ability (>70% conversion of EBITDA into OCF over the past 7 years). Further optionality is provided by the robust and debt-free balance sheet, with 2024e net cash at €19m on our numbers. Our model assumes a c36% dividend payout ratio, with KRI building further war chest in the coming years for accretive investments or heftier cash returns.

Valuation: increasing PT to €16.6; High-conviction Buy – As a result of the material profit uplift and the roll-over of our valuation to Nov 2025, we raise our PT to €16.6, effectively valuing KRI at c10x 2025e EV/EBITDA, namely more in symphony with the valuation of foreign peers, as we argue that KRI’s superior growth offsets the drawback of the smaller size and liquidity. We reiterate our high-conviction Buy, finding the valuation palatable given the stock is trading at