Kesko (Buy, TP: EUR25.00) - B2C soft, but B2B excels
The Grocery Trade’s (GT) B2C-driven Q4 miss has prompted us to cut our 2023–2024e clean EPS by c2% on average. The quality B2B elements (Onninen, Kespro) are heading in the right direction and supporting margins in tough markets, and we expect GT’s weakness to be temporary and thus for it to be largely stable. We reiterate our BUY and EUR25 target price.Kesko is a provider of trading sector services. Co.'s reportable segments are: food trade, which comprises the wholesale and B2B trade of groceries in Finland and the grocery trade in Russia; home and speciality goods trade, which comprises Co.'s K-citymarket Oy subsidiary's home and speciality goods; building and home improvement trade, which includes Co.'s Rautakesko Ltd's subsidiary's wholesale and B2B sales in the building and home improvement and agricultural trade in Finland, and the trade in Sweden, Norway, the Baltic countries, Russia and Belarus; and car and machinery trade, which comprises the business operations of Co.'s subsidiaries, VV-Auto Group Oy and Konekesko Ltd.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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