CECONOMY: In the eye of the storm (
CECONOMY: (NEUTRAL, Fair Value EUR6,2 vs. EUR8,5 (+33%))In the eye of the storm
In light of the new profit warning issued yesterday morning, which we attribute to a lower amount of suppliers’ contribution than anticipated in the company’s internal forecasts (internal huge misjudgment or sales level below the obligations negotiated with suppliers to benefit from back margins?), we have updated our model. We are now complying with the new guidance and expect an EBIT of EUR400m but remain concerned about the medium term, not knowing if such misjudgment has also inflated the medium term guidance. All in all, we cut our EPS estimates by c.20% over 2018-2020 and our FV from EUR8.5 to EUR6.2. Short term cost savings will remain key and the ongoing strategic review of store network could lead to radical choices including store closures.
Metro is a holding company. Through its subsidiaries, Co. is engaged in retail and wholesale. Co.'s operations are divided into four divisions: Metro Cash & Carry, Real, Media-Saturn and Galeria Kaufhof. The Metro Cash & Carry division operates in the cash and carry sector in Europe, Asia and Africa. The Real division is a hypermarket operator in Germany where it operates both stationary stores and an online store. The Media-Saturn division provides an assortment of brand products in consumer electronics retailing. The Galeria Kaufhof division operates department stores in Germany and Belgium. Co. is also a property manager through METRO PROPERTIES GmbH & Co. KG.
Since 1996, Bryan, Garnier & Co has been growing with an absolute conviction that the investment banking landscape would experience a major revolution: most of the large local generalist banking groups will disappear to the benefit of a handful of global powerhouses, and an emerging group of independent, highly specialised boutique investment banks.
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