Polish grocers: The lowdown from Poland
We have done our annual field trip to Warsaw to take the pulse of the retail industry in Poland. The mood was slightly less upbeat than one year ago, mostly due to the uncertainty around the impact of the Sunday trading ban. Most of the market participants expect the ban to have a limited impact on overall growth but there should be some shifts in the market share by format with online, service stations and convenience stores likely to take share from large supermarkets and hypermarkets. On the macro front, the background is still seen as quite supportive and despite all the talk about a step up in promotional intensity and advertising spending led by discounters, we do not think this has come at a material margin cost as Polish grocers have been enjoying some gross margin tailwind coming from a food PPI well below food CPI. Our top pick remains jerónimo Martins (JMT) with a BUY rating and a Eur16.0 FV, down from Eur17.0 due to the payment of a Eur0.605 DPS and the recent PLN weakness. We have upgraded Dino from Sell to Neutral and our FV from PLN70.0 to PLN95.1 on higher LfLs and margins. As for Eurocash, we remain Neutral but we have cut our FV from PLN26.7 to PLN23.5 on a slower profitability recovery.Dino Polska is engaged in the business of retail sale in non-specialized stores with food, beverages and tobacco. In addition, Co. conducts processing of meats and the resulting products are dedicated, in the form of culinary meat, to external recipients within Co.'s retail chain. As of December 31, 2016, Co. operated a network of 628 Dino stores.
Eurocash, through its subsidiaries, is engaged in the distribution of food products, household chemicals, alcohol, and tobacco products (fast moving consumer goods). Through a range of distribution formats, Co. and its subsidiaries focus its business activities on the wholesale distribution to customers across the wholesale market segments, in particular, to stores throughout Poland such as retail stores, convenience stores at petrol stations, restaurants, hotels and cafeterias. Co. and its subsidiaries operate a range of distribution formats focused on supplying independent stores in Poland, which primarily include: Cash and Carry, Franchise Systems, and Distribution.
Jeronimo Martins S.G.P.S. is a holding company. Through its subsidiaries, Co. is engaged as a food distribution company with operations in Poland and Portugal. Co. operates in four segments: Portugal Retail, which comprises the business unit of JMR - Gestao de Empresas de Retalho, SGPS, S.A. (Pingo Doce supermarkets); Portugal Cash & Carry, which includes the wholesale business unit Recheio; Poland Retail, which includes the business unit with the brand Biedronka; and Others, which includes marketing services and representations, restaurants in Portugal, health and beauty retail in Poland, and its retail business in Colombia.
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
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