Sonae: Fine-tuning numbers post Q4 sales
We have incorporated the stronger than we expected Q4 sales into our numbers but the overall impact on earnings has been below 1% as we kept ‘19e-‘20e LfL and space growth assumptions for the main divisions and we have trimmed electronics’ margin forecasts. We believe that Worten’s sales beat was mostly achieved through heavy promotions in the Black Friday period, whose growing weight on Q4 and FY sales should take its toll in terms of EBITDA margin. As for the valuation, the small sales beat at MC has added Eur0.01/sh to our FV and the good share price performance of NOS (NOS PL, Eur5.65, BUY, FV Eur6.90) a further Eur0.01/sh, allowing us to raise our FV from Eur1.30 to Eur1.32. The latter offers potential upside of 39% and the shares also look cheap on ‘19e multiples - 10.2x adj P/E, 4.3x EV/EBITDA and a well backed 4.9% DY. We reiterate our Silver Bullet BUY rating.Sonae SGPS is a holding company. Through its subsidiaries, Co. operates in four segments: Sonae MC, which is Co.'s food retail unit that had 478 stores as of Dec 31 2014; Sonae SR, which is Co.'s specialized retail unit, with a presence in the electronics, sports and fashion market and had 522 stores at Dec 31 2014; Sonae RP, which is Co.'s retail real estate unit which manages retail real estate properties of Co.; and investment management, which includes a company that operates in the retail DIY products, building and garden (Maxmat), a travel agency (Geostar), insurance brokers (MDS) as well as Wedo Technologies, Saphety, Mainroad , Bizdirect and Publico.
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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