Jumbo: Self-fulfilling prophecy (upgraded to BUY)
The Consumer Discretionary sector is under severe pressure, as companies face store closures and deteriorating consumer appetites. Among the (relative) winners, we see Jumbo as one of the players that should be able to weather the storm, due to: 1) its strong balance sheet 2) the defensive nature of its business as a discounter; and 3) its proven track record. However, we have lowered our 2020E estimates and expected store rollout, as Jumbo is not immune to the impact of COVID-19. We do believe that it is well-prepared to absorb the hit and survive the crisis without any major scars. We have upgraded the stock to BUY, with a new 12M PT of EUR 19.5/share (vs. EUR 21.5 previously), offering 22% upside to the current price. The stock trades at 8.1x on our 2020E EV/EBITDA numbers, but we believe that it offers a good entry point for a company with prudent balance sheet management, which is likely to benefit from the crisis, while sitting on EUR 600m of cash (as of December 2019).Jumbo is a trading company based in Greece. Co.'s main operation is retail sale of toys, baby items, seasonal items, decoration items, books and stationery. A part of its operations is wholesale of toys and similar items to third parties. Co. and its subsidiaries have four geographical segments: Greece, Cyprus, Bulgaria and Romania. At June 30 2015, Co. operated 72 stores in Greece, Cyprus, Bulgaria and in Romania and the on line store e-jumbo.
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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