Sarantis Group: No such thing as a free lunch (downgraded to HOLD)
In our Greek coverage, Sarantis Group is witnessing the effects of COVID-19 from the opposite angle, enjoying +20% higher sales in its core operations, due to the nature of its business as a FMCG producer. Nevertheless, as there is no such thing as a free lunch, we believe that the stock price rerating partially reflects the shelter that Sarantis offers, without incorporating the potential upside from M&A, which is also not included in our calculations. We believe that the strong performance of its own brand portfolio is partially offsetting the losses from the distribution agreements, while we guide for lower earnings from the Estee Lauder joint venture (JV), given the retail stores closures in March and April. All-in-all, we reiterate our view that Sarantis is a defensive play, with a consistent strategy, and a strong balance sheet to support potential M&A in the region, creating more shareholder value. We remain structurally positive on Sarantis; however, in light of the recent rerating of the stock price, we have downgraded the stock to HOLD with an updated price target (PT) of EUR 9.4, offering 11.0% upside and a good hiding spot, but at a price.Co. is a consumer goods manufacturer and distributor engaged in operations in Greece. Co. produces consumer goods such as cosmetics, pharmaceuticals, households, pet products, car's accessories and apparel. Co. produces its own brand name of cosmetic products such as Prosar, Str8, BU99, Clochard, Carroten, Tokalon and others. Co.'s product portfolio also includes a range of international brands such as Estee Lauder, Clinique, Aramis, Donna Karen, Orlane, Montana Versace and others.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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