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Casino has announced that it has launched a process to sell its renewable energy business GreenYellow. The deal could be valued at around €1.5bn, which is in line with our NAV valuation. Engie and Total Energies are touted as the potential bidders. We expect the retailer to use the proceeds to reduce the French debt. Such a move could also enhance Casino’s prospects as a M&A target, in our opinion. Positive recommendation reconfirmed.
Companies: Casino Guichard Perrachon (CO:EPA)Casino, Guichard-Perrachon SA (CO:PAR)
Casino’s Q1 FY22 performance was ahead of our expectations. The beat was witnessed in both the same store sales and EBITDA. The French business has posted growth in the first four weeks of Q2, which is a positive change after many quarters. The net debt is still higher than our comfort levels and we expect the asset disposal plan to be achieved faster than the management’s timeline of end-2023. We maintain our positive stance based on the stock’s valuation.
Casino’s Q4 and FY21 performance was below our estimates and market consensus. Although the group’s sales and EBITDA were in line, net income was a disappointment. Among other red flags, the same stores sales was weak in the initial weeks of FY22, net debt has increased and doubts remain over the resumption of the dividend in 2022. Although the share price decline is much more than warranted, we will reduce our estimates and target price.
Casino’s stock price has slipped c.16% in 2022 ytd (vs a flattish performance for the sector). Investors have penalised the grocer for a higher reliance on proximity banners, which are concentrated in urban areas (e.g. Paris). Poor footfall / tourist flow due to the recent pandemic wave has been a key culprit behind the recent profit warning. However, this is not a structural issue, in our opinion. Our current estimates are already conservative vs the revised EBITDA guidance. No change in the st
Casino’s Q2 and H1FY21 performance was a mixed bag – the top line declined but profit improved strongly. While the LatAm performance remains healthy, the sharp slump in French retail sales was an unpleasant surprise, raising concerns about if and when this segment will return into the black. Management needs to continue improving the FCF and reduce the debt in order to strengthen the investor confidence. We will trim the earnings downwards but maintain the positive stock recommendation.
Casino’s Q4 and FY20 performance was stronger than our expectations. Management’s success in improving profitability and its progress in new businesses are noticeable developments. However, we do not expect the performance of French hypers to return into the black in FY21. Despite a few hiccups and further needs to reduce debt, we continue to believe in the attractiveness of the stock’s valuation.
Casino’s Q3 performance was a mixed bag; sales and profitability were healthy overall but French same-store sales were flattish. Low tourist numbers in July were followed by positive momentum in the subsequent months. We see more chinks in the armour, however, and Q4 is likely to be do or die in terms of both the operational performance and gross debt reduction. We plan to trim our estimates but will maintain our positive stance given the cheap valuation.
Companies: Casino, Guichard-Perrachon SA
Casino has lost more than 50% of its market value over the past ten months. We spoke with the group’s CFO to get a clearer perspective about the pressing issues, especially the strength of the French operations, high leverage and some governance-related matters. There is no doubt the stock is controversial and poses a higher risk vs most European grocers. However, the business is still robust and the issues are being addressed. In essence, Casino is a screaming ‘Buy’ even after factoring in all
Casino’s top-line performance was strong, akin to other European grocers. While the panic buying is a temporary phenomenon, we note a strong improvement of €67m in the French EBITDA (+190bp yoy, according to our calculation). The retailer is well placed vs close competitors to tackle the ongoing crisis, on the back of a higher reliance on proximity formats and better developed e-com business. We maintain a positive stance on the stock.
While Casino’s underlying performance was strong, the overall increase in net debt was a sore point. However, French net debt, a pain-point for a long time, witnessed a decline. Casino is also better placed relative to other close competitors on the home turf, largely due to its strategically-placed premium / convenience stores and a strong e-com proposition. We maintain our positive stance on the stock.
Two positive developments have been reported for Groupe Casino / Rallye. A Paris court has approved the safeguard plan and Daniel Kretinsky has agreed to provide up to €233m as a loan to refund the derivative deals Rallye had sealed with the financial institutions. With this development, Casino will now be under less pressure to resume the dividend payments to Rallye, in the forecast years.
Casino’s Q4 performance was impacted by pension strikes in France. Recent controversy about parent entity Rallye’s debt repayment proposal has also dented the investor sentiment. While we do not see any structural issue in the French operations, the company is also well-enough equipped to aid its parent to honour the obligations (considering the plan is approved by the court). We continue to believe in management and maintain a positive stance on the stock.
Casino’s Q3 19 performance was slightly below our expectations. While LatAm remained strong, the French premium banners once again struggled to remain in the black (same store sales basis). Management’s reasoning of a tougher comparable base answers our apprehensions partially. Having said that, we remain confident in Casino’s capability to achieve its near-term guidance – French performance and debt reduction. We will tweak our estimates slightly downwards.
Casino’s Board made a few positive announcements yesterday, following which the stock price ended the day 9.2% higher. Launch of second phase of the asset disposal plan and further simplification of the organisational structure in LatAm is likely to boost management’s credibility as well as investors’ sentiment. We reiterate our confidence in the company’s ability to turnaround the business (especially in France). Positive view maintained on the stock.
There were no major surprises in the Q2 results. The underlying performance remains on the right track in both operating geographies (LatAm and France). Management has confirmed FY19 financial guidance. The French net debt reduction target has been improved further to less than €1.5bn by end-2020 (vs €2.9bn at 30 June 2019), and this should be sustained at this level in subsequent years. No change to our stock recommendation.
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Tesco’s Q1 trading performance was a mixed bag. The UK and ROI retail business was softer than expected but overall sales were stronger than our estimates. Wholesale business Booker and Central Europe led the pack. The company witnessed market share gains in almost all geographies. However, management has accepted that cost pressure is posing a challenge. The annual profit outlook has been maintained. We will trim the financial estimates slightly.
Companies: Tesco PLC
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Sainsbury’s preliminary FY21/22 results were in line with the street expectations. The lfl sales came in at -2.3% yoy, as the positive momentum in clothing was offset by weakness in grocery and general merchandise. Management’s profit guidance for FY22/23 is weaker than the consensus. We expect the retailer to continue with the cost savings plan and reinvest a portion to remain competitive, especially among the big four players. We will be trimming our FY22/23 estimates.
Companies: J Sainsbury plc
Walmart had another rock solid quarter with a revenue growth of 7.6% in constant currency and a staggering 24.1% growth in operating income at constant currency. Moreover, Walmart Connect, their advertising business in the United States, more than doubled in size as compared to the prior-year quarter, with more than 170% growth in active advertisers. The management provided a series of interesting updates with respect to various innovative initiatives. Their latest investments aim to increase as
Companies: Wal-Mart Stores (WMT:NYSE)Walmart Inc. (WMT:NYS)