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Logista: 2018 likely to be a better year

We reiterate our BUY on Logista after updating our estimates and raising our FV from Eur22.5 to Eur23.6. 2017 adjusted EBIT was lower than initial guidance as tobacco tax hikes in France & Italy were not fully passed onto consumers, hurting the operational performance. For 2018E we expect EBIT to grow by double digits, in line with new guidance, with the recovery largely driven by recovering from inventory losses in 2017. We continue to see Logista’s position as very defensive and profitable as a tobacco logistics operator with a quasi-monopolistic status. Despite negative tobacco volumes, its economic sales are mostly protected through a mechanism of prices being inversely correlated to volumes. Furthermore Logista has been increasing the penetration of other tobacco products and convenience products, leveraging on more than 300k points of sale which gives a growth angle to the business. An 18E DY above 5% and EV/EBITDA of 9x for an asset light company with a strong balance sheet, strong FCF and exposure to the economic recovery in Europe support our Buy rating. In this note we transfer coverage of Logista to Nuno Estácio.