FOURLIS | Re-rating catalyst approaching
OpCo offered almost for free – Fourlis shares are still some c30% lower than pre-COVID levels, which looks overly punitive in view of 2023e operating profits set to shape just c11% lower than the 2019 mark and to bounce strongly thereafter (2-digit growth) as the pendulum of operating leverage swings back to positive. With the REIC (€211m NAV) just a few months away from getting listed (H2’23), a key re-rating catalyst is finally approaching. Although near-term uncertainty regarding the OpCo bottom line performance remains, at these levels we find the stock as sufficiently de-risked as investors effectively pay for the REIC while receiving the OpCo almost as free option. In our view, this indicates quite a compelling risk-reward skew and we thus reiterate our Buy rating. Our SOTP points to a value in excess of €5 per share, consisting of €3.4 for the REIC (assuming no further scale-up) and €1.8 for the OpCo.2023: strong top line + resilient gross margins vs opex inflation and higher financial costs – Q4’22 saw top line run rates accelerate markedly thanks to a confluence of factors including strong price/mix and abating supply chain issues for IKEA. With 2-digit run rates continuing in Q1’23 and in the light of a sanguine macro outlook for Greece, mgt looks confident it can sustain 2-digit revenue growth in 2023 (despite the c5% drag from the exit from AF and Turkey) thanks to the demand uptick, fading supply chain snarls and the carry-over effect from last year’s pricing. The top line growth and resilient gross margins (along with potential revaluation gains related to the REIC) look set to be offset by opex inflation (mainly staff and rentals) and higher financials due to tighter policy settings. Overall our numbers envisage c4% yoy growth in group EBITDA after leases (EBITDAaL) in 2023, but with growth accelerating markedly in the coming years.
Quite bullish mgt medium-term targets; business primed for growth in the long-run – Mgt has guided for €750m retail sales by 2026e, some 50% above 2022 anticipating material growth for its 2 current concepts and a €50m contribution from the HB franchise. Our recalibrated estimates are c10% lower than these levels but the guidance is indicative of the operating leverage in the business: mgt expects an uplift of the retail EBIT margin from
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.
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