Jumbo | Outlook solid rather than exciting
A year to remember, (almost) as good as it gets – 2020 was indeed a year to remember (or to forget), with Jumbo having to navigate >4 months of lockdown in Greece, social distancing restrictions and supply chain challenges. The covid disruption was acute but Jumbo managed to contain the sales decline to just 18% in CY20, much better than we had initially feared. Tight cost monitoring, minimal rental costs during the shutdowns and a resilient gross margin in H2 are set to limit the yoy EBIT drop to 40% discount vs peers. That said, we believe that factors such as lower returns (due to high inventory and inefficient balance sheet), high dependence on the Chairman and suboptimal corporate governance are likely to keep the relative valuation gap rather wide, restraining our positivity on the stock. We have recalibrated our model to reflect the 2nd lockdown in Greece and somewhat more tepid trading in 2021 on continuing social distancing. Our PT (DCF-based at 9.4% WACC) effectively places Jumbo at 6.5x CY22e EV/EBITDA, c22% discount vs peers, in sync with the long-term 2-year forward discount.Jumbo is a trading company based in Greece. Co.'s main operation is retail sale of toys, baby items, seasonal items, decoration items, books and stationery. A part of its operations is wholesale of toys and similar items to third parties. Co. and its subsidiaries have four geographical segments: Greece, Cyprus, Bulgaria and Romania. At June 30 2015, Co. operated 72 stores in Greece, Cyprus, Bulgaria and in Romania and the on line store e-jumbo.
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.
Research is the backbone of Eurobank Equities' platform, with a team of 4 professionals committed to generating actionable investment ideas by providing timely research products. We are committed to offering value-added services to clients by filtering market noise and providing insights on the multiple sectors that we cover. Our universe includes 26 - large, medium and small cap - companies whose market capitalization amounts to 80-85% of the total market capitalization of the Athens Stock Exchange. Our research team also maintains the capacity to generate ad-hoc research for micro-cap listed companies.
Our team has consistently gained recognition among institutional investors for its quality research, having ranked No. 1 team in Greece at the Extel Surveys of 2013-2016 and 2018. We have also been named Leading Brokerage Firm in Greece over 2014-2016 and in 2018.
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