Mixed Results for Tesco in First Half With Asia Weakness Weighing on Margins; Shares Fairly Valued
No-moat Tesco reported half-year results with group like-for-like sales up 2.2%, in line with our expectations, but EBIT disappointed due to continued weakness in Asia. Management reiterated guidance on synergies and margin targets and announced a dividend of GBX 1.67 per share (67% up). We intend to lower our fiscal 2019 operating margin forecast for the Asia segment and hike our Booker top-line forecasts, as the business benefits from access to Tesco's buying capabilities. As such, we don’t ex...Tesco is a retailer. Co. and its subsidiaries are engaged in retailing and associated activities in the U.K. and Republic of Ireland; and Czech Republic, Hungary, Poland, Slovakia, Malaysia, and Thailand. Co. provides retail banking and insurance services through Tesco Bank in the U.K. Co. sells and services of motor and home insurance policies underwritten by Tesco Underwriting Limited, or in a minority of cases by a third-party underwriter. As of Feb 25 2017, Co. had a total of 6,809 stores worldwide, including 256 franchised stores.
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