Q4 expected to offset Q3 miss

Mixed set of results. Pernod missed the consensus and our expectations for the third quarter, but we see some positives: strong Q4 expected and satisfying FY23 guidance

No false notes

Every quarter we await a negative impact that never comes. Once again this is a very reassuring report with a beat on the last quarter and confirmation of the FY guidance.

US, more fear than harm

Despite the Q1 sales beat, there had been fears about the US and an eventual slowdown given the weak organic growth during the quarter. This was quickly dismissed by the management during the conference call: no change in consumer behaviour. For the time being. In any case, the discourse continues to be much more reassuring from the spirits side than from brewers. So we maintain our preference for spirits.

The lights continue to be green, for now

Solid and record FY22 results boosted by the buyout post-COVID-19 environment. Normalisation is expected in FY23, but a good start to the year. The mid-Autumn festival performance will be looked at closely to be able to make conclusions regarding China. We remain confident about the spirits sector.

Doing well despite China

Unhelpful situation in China, but included in the relatively good FY22 growth margin outlook of >17%. The sales momentum remains strong with the off-trade remaining resilient and a rebound for on-trade/travel retail. The valuation is attractive. Go for it.

No wrong notes

Remarkable H1 beat with outperformance in the Americas and Europe. The FY22 guidance is not a formal one, but the tone is positive. Inreasing share buy-backs for the year definitely convince us. Confidence remains on spirits.

Definitely back in business

Strong Q1 performance with sales ahead of consensus. We note the lack of FY22 guidance, but Pernod continues to be one of our top picks in the current inflationary environment.

Strong 2021, but still unclear for 2022

Strong 2021 given the context and good news regarding shareholder returns. The mid-term ambitions are well appreciated, but it is a slight disappointment that there is no clear 2022 guidance which confirms that the environment could remain uncertain. We should have more information at the capital markets day expected later this financial year (probably in the spring).

Pernod sets the tone (positive) for other spirits

Q1 sales figures beat consensus expectations, as well as the FY21 guidance of 10% EBIT growth (vs. mid-to-high single-digit growth expected). China is booming (comps and CNY), while the US is continuing to show strong momentum in the off-trade coupled with the gradual reopening of on-trade.

Encouraging H1, although its geographic exposure creates a gap with its peers

Relatively strong set of H1 FY21 figures, not surprisingly driven by the strong US consumption and the Chinese recovery. No FY21 EBIT guidance given, while the group expects organic sales growth for the year.

Is the hangover over?

Q1 organic sales growth exceeded consensus expectations (-5.6% vs. -12.9% expected), and the company is seeing a return to growth in H2 (comparables). The current attractive valuation vs. other spirits players should be another argument to revisit Pernod.

No FY21 guidance

The transparency on future expectations, which we had been used to from Pernod during this crisis, did not continue, with no guidance given for 2021. However, we should expect a gradual recovery, with a still subdued H1.

On-trade negatively weighs, off-trade not immune

Q3 “saved” by the solid start of the quarter in occidental countries, but Q4 should be worse as it will be reflecting the total COVID-19 impact. It is now difficult to believe in a “strong” V-shaped recovery next year.

FY20 guidance cut due to Coronavirus

A strong H1 FY20 has beaten the PRO expectations, while the FY20 guidance has been cut (purely) on the Coronavirus troubles. The market finally paid for the group’s transparency about the impact.

High comparison basis, but that’s not all

Although expected, Pernod Ricard reported results that we judge are even worse than what we had expected. Q1 sales growth was moderate and this is a clear picture of what’s going to happen during the year. However, it is in line with the group’s medium-term outlook. FY20 guidance confirmed.

Shares trading >20% below adj. NAV; positive category data

Chapel Down share price in recent weeks has retreated to a 22% discount to our adj. NAV of 38p. This is overdone and offers an attractive entry point on deep value and structural growth considerations. Recent Nielsen off-trade data for English sparkling wine remains highly positive, with April numbers in particular stellar (boosted by the King’s coronation). The growing season is anticipated to have got off to a good start as has the brand relaunch over Q2. While we make no forecast changes, our

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Hybridan Small Cap Feast - 07 Jun 23

7th June 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

Morning Note – 9 June 2023

Morning Note – 7 June 2023

Achieving milestones

M.P. Evans - Another strong year

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Hybridan Small Cap Feast - 08 Jun 23

8th June 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectiv

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Morning Note – 21 March 2023

M.P. Evans - AGM trading update: a mixed bunch

MP Evans’ AGM trading update is more complex to interpret than usual but, on balance the positives offset the negatives, so we leave our forecasts and 1300p target price unchanged. After a good start to the new year, processing of fresh fruit bunches (FFB) has moderated slightly due to crop seasonality, which should reverse later in the year. Crude palm oil (CPO) mill gate prices fell by 28% to US$779/tonne, but this remains comfortably above out FY23 forecast assumption of US$710/tonne. The oil

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