Jeronimo Martin’s Q2 performance was slightly ahead of our estimates. All banners clocked positive lfl sales momentum (+10.1% yoy), on the back of a soft comparable base and continued strength in Poland and Colombia. Market share gains in Biedronka are also a positive development. The EBITDA margin also improved 60bp to 7.7%. We will improve the financial estimates slightly upwards but do not expect any change in the stock recommendation.
Companies: Jeronimo Martins SGPS (JMT:ELI)Jeronimo Martins, SGPS S.A. (JMT:LIS)
Jeronimo Martins’ Q1 FY21 performance was ahead of our expectations. The lfl sales grew by 3.2%, once again aided by the Polish banner Biedronka. The Colombian banner Ara is also progressing well with time. The Portuguese businesses (Pingo Doce and Recheio) continue to be under pressure, but we expect a gradual improvement in FY21. Tight cost control has also aided the company in beating consensus estimates. We maintain a positive stance on the stock’s valuation.
Following the Q4 sales update, Jeronimo Martins has announced FY results slightly below our estimates. In FY21, we expect the Polish banner Biedronka to preserve profitability, and the Colombian banner Ara to improve further. However, the Portuguese business is likely to remain under pressure. The strategy to continue with inorganic expansion (despite the pandemic led hiccups) is also a step in the right direction. We maintain a positive stance on the stock’s valuation.
Jeronimo Martins announced Jeronimo Martin’s Q4 FY20 sales performance was slightly below our estimates. The lfl sales grew by 3.5% yoy, once again led by the Polish banner Biedronka. However, the health of Portuguese business remains a concern, even after adjusting for the adverse impact of the pandemic. While we will trim the financial estimates, the stock valuation is still attractive in our opinion.
Companies: Jeronimo Martins, SGPS S.A.
Jeronimo’s Q1 performance was in line with our expectations. However, we see some chinks in the armour considering revenue came under pressure in April, especially in the Portuguese retail banner Pingo Doce. The EBITDA margin’s erosion is not a structural issue, however. The reduction of the dividend and withdrawal of FY20 guidance has also added to investors’ discomfort.
Jeronimo Martins closed FY19 with stronger than expected lfl sales growth. Once again, Polish banner Biedronka led the pack. Portuguese retail banner Pingo Doce was a positive surprise. Colombian segment Ara also benefitted from sales density and strong consumer demand. We believe the momentum is sustainable in Biedronka and the Portuguese cash & carry banner Recheio. However, Pingo Doce is expected to moderate in FY20. Overall, we take a more positive stance on the stock and will tweak the fina
Jeronimo Martins posted Q3 results slightly ahead of our estimates. While the Polish performance was robust again, deflationary conditions and strong comparables moderated the growth in the Portuguese retail format Pingo Doce. We expect the Q4 lfl growth to soften slightly. The profit margin is estimated to remain flat in the forecast years. We will improve our estimates slightly.
JM’s Q2 performance is better than our expectations. Strong top-line momentum was witnessed across all operating banners (lfl basis). The EBITDA margin has also improved slightly (vs a 10bp decline in Q1), resulting in flat profitability in H1 FY19. More details after the conference call but we expect to increase the financial estimates.
The Q1 results were ahead of our expectations, after adjusting for the adverse impact of the Sunday ban and the delayed timing of Easter. All established banners are likely to remain strong / gain market share. Despite an improved gross margin, profitability is likely to remain under pressure in the forecast years. We will improve our estimates and take a more positive stance on the stock. The recommendation is likely to be raised by one notch.
There were no surprises in FY18 results. In FY19, we believe the company will be able to clock positive lfl and profitability is also likely to remain stable. Management’s strategy to open smaller format stores in less densely populated areas is a step in the right direction. No change to our stock recommendation.
Jeronimo Martins is likely to face tougher competition / higher promotional activity in its key operating geography, Poland. Striking the balance between Polish lfl growth and profitability would be a key stock price trigger in our opinion. We have tweaked our earnings estimates slightly, but no change in the stock recommendation.
The Q3 performance was healthy in Portugal but weak lfl growth in Poland is concerning (c.65% of group revenue). Another issue is negative FCF in 9MFY18. Of the two explanations, while accelerated capex is acceptable the slump in working capital is concerning (management attributes it to the base effect). We have trimmed our estimates for three valuation methods (DCF, NAV and Relative valuation). However, the stock is still attractive for patient investors. No change in stock recommendation.
Jeronimo Martins (JM) is the worst performing grocer of 2018 in AV’s food retail coverage (-26% vs +8% weighted average, respectively). In fact, a closer look at the graph below reveals that the retailer’s stock price has slumped by almost a third from the 2018 highs seen in the first quarter.
One might wonder what’s wrong with the best-in-class performer – ROE (21.9% in 2017 vs sector average: c.7%) and a healthy balance sheet (net cash position in 2017). A closer look at the recent performan
The Q1 performance once again reflects the strong business model of Jeronimo Martins. The company looks better placed in its core geographies to preserve market share and exploit any growth opportunities. Management should also be able to reduce the losses in the Ara and Hebe formats in the forecast years. No change in stock recommendation.
Jeronimo Martins reported Q4 and FY17 results below our estimates. We believe the top-line should continue to benefit from the strong consumer environment in Poland (barring the impact of the Sunday trading ban) and group-wide investment in value propositions and promotional activity. However, the EBITDA margin is likely to be under pressure going forward. We have tweaked our estimates slightly but maintain the stock recommendation.
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Tesco’s H1 performance was stronger than our and the street’s expectations. The key takeaways were positive lfl in Q2, a gain in market share, step rise in operating profit and a credible plan to generate future growth. Moreover, the success in clocking price deflation (despite external headwinds) and adept supply chain management were also some noticeable developments. We remain positive on the company’s management and the stock’s prospective performance. We will improve our financial estimates
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