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A Q4 in line and the reiteration of the FY22 coupled with a confident tone for Q1 FY23 have reassured, although the situation in China remains a concern.
Companies: Remy Cointreau (RCO:EPA)Remy Cointreau SA (RCO:PAR)
Another quarter, another beat, but no change in the FY21 guidance and a CFO comfortable with the current FY21 consensus expectations. However, the publication set the tone for the spirits report, with growth momentum definitely still favourable. We continue to prefer more affordable peers like Diageo and Pernod Ricard.
An exceptional H1 EBIT, with strong beats everywhere, which, for a large part, will drive the FY21-22 EBIT growth. A strong upgrade is expected for consensus’ full-year expectations, although H2 is expected to slow. The performance can justify the rich valuation, but we see more upside for peers.
“Unsurprisingly” strong Q2 sales figures driven by still-strong momentum in the US and China. The guidance was raised qualitatively, but still lacks clarity.
No upgrade in the FY21/22 guidance despite Q1 sales beat and what appears to be a better-than-expected operating performance. The results set a positive tone for the sector, but for Remy Cointreau we believe that the stock is definitely too expensive.
Our view remains unchanged: the results are good, the outlook does not look bad either but the stock is now too expensive and therefore we see limited upside for the moment.
A slight miss on the Q4 top line, but full-year earnings, with the group expecting about 10% organic growth in EBIT, as well as its guidance of a strong start to FY22, remain supportive, although we believe these are already priced in.
Strong Q3 revenue beat driven by the US and Mainland China. The group’s confidence about its outlook and the Chinese New Year should slightly liven up the stock somewhat in short term due to the recent weakness, although we believe that most of the positives are already priced in.
Companies: Remy Cointreau SA
Strong momentum in the US and Mainland China has led to upgraded H1 EBIT guidance. We, however, struggle to justify the current very rich valuation.
Better-than-expected first-quarter sales, which exceeded expectations. Coupled with unchanged expectations for the second quarter, the group has positively revised its H1 expectations, while the US and China are expected to push the second half of the year higher.
FY20 Remy Cointreau’s operating profit beat our expectations (€215.1m vs. €208m), while the company also raised its Q1 FY21 guidance. 2021 will still be a challenging year, with a strong drop expected in H1, but the mid- to long-term outlook has brightened.
Fine FY20 sales, as they dropped in line with the consensus, but Q1 FY21 should ultimately be worse than expected and Q2 should show a recovery (but still negative growth). The H1 operating profit should therefore be under pressure. Remy is attractive in the mid-term, but the lack of diversification and high valuation means that we should continue to keep away from the stock at this stage.
The group reported an even worse than expected set of Q3 results, leading to the decision to hold off on the previous annual and midterm objectives. There was significant weakness in cognac and the situation was no better for Liqueurs & Spirits. China remains the negative hot spot, and we don’t see any improvement in the short-term.
Remy reported H1 EBIT which missed the already-lowered consensus expectations (€138.3m vs. €144.6m expected), mainly due to the higher than expected holding company’s costs. External factors (HK protests and unusual replenishment in the US) have penalised the group, and we are now convinced that it should report less bright FY results than last year. Improvements are expected in H2, and particularly in Q4 as Q3 should remain highly linked to the volatile macro environment.
While Q2 was expected to see acceleration, the group reported -3.6% organic sales growth (-4% in Q2, est. -2.7%) due to technical factors and Group Brands growth below its expectations. The unclear guidance isn’t reassuring.
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