Jerónimo Martins: Getting the ball rolling again
JM will report Q4 sales on Jan 11 and results on Feb 27, both post market close. Main investor focus should be once again on Biedronka’s LfL, which has missed consensus for the past two quarters. We see very limited room for another miss in Q4 as consensus expectations have come down significantly post Q3 and Poland food retail sales in Oct/Nov have been stronger than we expected. We forecast LfL to pick up from 0.8% in Q3 to 2.0% in Q4, mostly on the back of a weaker headwind from the Sunday ban and, if anything, we see some upside risk if Dec retail sales turn out as strong as Nov’s. Any minor surprise could help in restoring some investor confidence, as after a 25% lag to the SXRP in 2018 the shares are trading at what we see as a quite depressed valuation for what is essentially the #1 grocer in Poland. We note that adjusting for Ara and Hebe losses, JMT trades at 11.6x P/E 19e and 6.3x EV/EBITDA 19e and our Eur15.2 FV offers 44% upside potential. We take this opportunity to reiterate our SB BUY rating.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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