Colruyt’s H1 FY20/21 performance was slightly ahead of our estimates. While we expect the top-line momentum to continue in H2, management needs to plug the market share erosion, especially in Belgium. The recent improvement in the gross margin is also non-structural in nature, in our opinion. Although we continue to see Colruyt as a competent market leader, the stock’s valuation remains unattractive at the current levels.
22 Dec 2020
Strong H1 performance; but the valuation remains unattractive
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Strong H1 performance; but the valuation remains unattractive
Colruyt’s H1 FY20/21 performance was slightly ahead of our estimates. While we expect the top-line momentum to continue in H2, management needs to plug the market share erosion, especially in Belgium. The recent improvement in the gross margin is also non-structural in nature, in our opinion. Although we continue to see Colruyt as a competent market leader, the stock’s valuation remains unattractive at the current levels.