Jumbo: Still a safe play (stays BUY - transfer of coverage)
We transfer coverage of Jumbo, reiterating our BUY rating, with a slightly lower 12M price target (PT) of EUR 19.0 (from EUR 20.0/share), reflecting: a weaker EUR/USD; a more competitive peer valuation; and stable, but single-digit growth in Greece. Our investment case remains intact as, despite the currency headwinds and challenges in freight costs, Jumbo is managing to adjust its sails, in our view. While cutting our top line and earnings for 2019-21E slightly, we anticipate an EPS CAGR of 6.6% and consistently strong free cash flow generation (FCF/EBITDA of 43% on average for 2019-21E), backed by its proven historical resilience. In addition, we cannot help but be tempted by Jumbo’s discount vs. its peers on both P/E and EV/EBITDA, and believe that its satisfying valuation, coupled with ytd share price depreciation of 14.1%, provides an attractive entry point, offering a bold 49% upside to the current price.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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