EUR 300.00 For Business Accounts Only

Fourlis | Waiting is the hardest part

Fourlis’s sequential acceleration in Q2 constitutes a satisfactory performance against the background of volatile domestic macro, albeit not one that can send out compelling signs of a strong upswing in run rates. That said, looking ahead we believe that there are reasons to be cheerful as the Greek macro backdrop improves and the govt implements its pro-growth agenda. In addition, although the waiting for a convincing uptick in trading momentum is testing investors’ resolve, we see 2 potential catalysts that are likely to brighten the mood in the coming quarters: 1) the REIC structure, which we expect will gradually move the debate, in terms of fair value for the group, to >€6 per share; and 2) the potential value creation from new mini-stores, with our estimates pointing to >€0.10 per share value accretion from each new mini store.

In this note, we have lowered our comparable EBITDA c3-4% (c€2m) with our PT revised down to €6.10 (from €6.20). We effectively value Fourlis at c6.7x 2020e adj. EV/EBITDA, still c20% discount to EU retailers. Our analysis suggests that a combination of 10% discount to NAV for the REIC and >6.5x adj. EV/EBITDAR multiple for the OpCo – which we consider to be realistic – yields a fair price >€6.2 for the group. On that basis, we expect the upcoming REIC demerger to eventually catalyse a re-rating for the shares.