Fourlis | COVID-19 scenarios
Stress-testing estimates for various COVID-19 scenarios – In this note, we build on our recent work on OPAP and Jumbo, extending our COVID-19 scenario modelling to Fourlis. The scenarios we examine model a €13m-€49m swing in 2020e EBITDA vs our current numbers (which assume full lockdown until April, with strong bounce-back in H2). We find that, after having secured extra liquidity of €50m, Fourlis has built enough war chest to handle a store closure period even beyond the end of 2020. We also argue that thanks to Fourlis’s investment in e-commerce in previous years, digital sales will help the group suffer minimal cash burn during the suspension period, thereby protecting its existing liquidity.The scenarios – We are modelling the following scenarios: 1) Suspension of shops throughout Q2, with c6.5% bounce-back in H2. 2) A full suspension throughout Q3, with re-acceleration in Q4 and full normalization in 2021, with 2021 sales just 4% lower than in 2019. 3) Similar to Scenario 2, but with the additional assumption that the prolonged period of shutdown and the resulting severe disruption in economic activity trigger a recession resulting in 2021e revenues shaping c11% below the levels of 2019, and 2021 EBITDA (pre IFRS16) returning to 2015 levels (c€32m).
Mitigating actions – Fixed costs stand at c€14.5m/month but mgt expect this to be reduced to c€7m by virtue of recent measures announced by the govt (salary subsidies, rent relief programs etc). In our modelling, we have assumed c70% of the cost saves targeted by mgt. On the cash flow front, mgt has already pointed to credit flexibility being agreed with major suppliers. Under a bear scenario of extended lockdown, we believe further support by InterIKEA would come into play, similar to the experience of the Greek crisis in 2012-14, thereby protecting working capital.
Valuation – Fourlis is trading at c6.5x 2020e adj. EV/EBITDAR, significant discount to the LT average. Assuming return to normality in 2021, the valuation falls to c5x. Our modelling exercise yields a 12m fair value range between €3.1 (closure until September & recession) and €4.9 (current estimates, lockdown ends in April), thereby pointing to a very compelling risk-reward profile for long-term investors.
Co. is engaged in the manufacture, import and distribution of electrical household appliances and the manufacture of FOURLIS kitchen hoods. In addition, through a subsidiary, Co. is engaged in the operation of a retail chain.
Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.
Eurobank Equities S.A. offers a comprehensive suite of investment products—including equities, derivatives, bonds, and mutual funds—serving over 15,000 private, corporate, and institutional clients in Greece and internationally.
The firm maintains a dominant position in the Greek capital markets, consistently ranking among the top brokers in terms of market share and is repeatedly recognised in major institutional investor surveys as one of the leading brokers and top Equity Research Providers for Greece.
Its multi-awarded Research Division delivers timely insights and fundamental coverage on almost 40 listed companies—representing over 90% of the ATHEX’s market capitalisation and traded value.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.