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JUMBO | Patience you must have

Another record year; on track for c10% EBIT growth in 2024 – Jumbo delivered 20% EBIT growth in FY23 thanks to 14% higher sales, resilient gross margins (-15bps yoy, albeit >3pps higher than 2019 levels) and opex savings (opex just +6% yoy). Coupled with net financial income given the debt-free balance sheet, Jumbo grew net profits by a whopping 22%, eclipsing the +20% embedded in our estimates a year ago. Mgt proposed another generous €1 DPS following the €0.6 paid in March, adding up to c6% yield until July. The FY24 guidance (8-10% growth) looks underpinned at the current juncture despite supply challenges and a volume-dependent top line.

… but valuation remains rather muted; top pick – Although the shares have narrowed somewhat the valuation gap vis-à-vis other retailers, the valuation is still compelling not only on a relative basis (with the stock at 20-30% discount vs best-in-class peers) but also on an absolute basis discounting a rather pessimistic setup. Indicatively, at the current price the shares embed value destruction in the future, as the current EV seems to be below the value implied by current operating profits, as showcased by our reverse engineering exercise, incorporating