Unscheduled Q2 trading update leads to full year profit upgrades of c.10% Last night Kingfisher reported continued strong trading. The market was already anticipating consensus upgrades but the scale (likely c.10%) was impressive and there is upside risk heading into H2 unless trends fade sharply. We raise our target price to 390p but maintain our Neutral rating. Strong Q2 trading not a surprise, but UK standout performer Industry data (Banque de France, Barclaycard) and competitor results (e.g. Toolstation) already suggested continued strong trading at Kingfisher. The company reported that for the first 10 weeks of Q2 (May to mid-July) like for likes were +22.3% on a two-year stack. This was ahead of expectations for the quarter (Visible Alpha consensus +15.2% and Exane BNPP +18.6%). Compared with our forecasts the UK was ahead but France and Poland were slightly behind. H1 profit guidance raised, but it''s all about the H2 fade Kingfisher raised its H1 Adj PBT guidance from GBP 580-600m to GBP 645-660m. Banking the beat versus prior consensus GBP 602m implies a full year upgrade (from GBP 850m) of between 5% and 7%. Our FY forecast was already higher, at GBP 890m, and we raise by 8% to GBP 965m today. We think H2 consensus is modelling too sharp a sales slowdown from the current two-year stack LFL run-rate of +22% to H2 +8%. We model +14% in H2, i.e. one year LFL of -1.6%. Our H2 Adj PBT forecast of GBP 305m still strikes us as potentially conservative: last year''s GBP 371m was after repaying GBP 68m of government support so we are allowing for a GBP c.130m drop in underlying profits from lower sales, more marketing, promotion and input inflation. Our FY Jan-23 Adj PBT forecast rises 6% to GBP 860m. Target price up to 390p but maintain neutral rating On our new forecasts at the current price (369p) the stock trades on CY22 P/E 11.7x and FCF yield of c.5%, with surplus cash which it could potentially begin to return to shareholders. We...