LFLs still positive. Greggs has continued to experience a strong recovery in performance since it last updated on 10 May. Management had expected the reopening of cafes & restaurants to result in increased competition. In recent weeks, the impact of retail pent-up demand has reduced, but June’s LFL sales growth in company-managed stores were up between 1% and 3% versus the same period in 2019. This compared to the -3.9% LFL performance for the 8 weeks to 8th May when 2 year LFLs accelerated to positive territory in the final weeks after non-essential stores re-opened on 4th April, despite many Greggs shops offering a more limited range. Management anticipates there would be a materially positive impact on profits if this sustained level of sales recovery continues. More guidance will be given with the 1H results on 3 August. Increasing FY21E/FY22E PBT by 26%/23% to £131m/£145m. Implied within our forecast is flattish 2H sales versus 2019, compared to our previous assumption of down 5%. We note consensus was already above our forecasts before this update, looking for FY21/FY22 PBT of £111m/£126m according to FactSet. Assuming no further disruptions to trade, Greggs is on track to resume a dividend payment in our view. Valuation (CY22E PE 21.1x) remains undemanding and in our view does not reflect cash generation nor Greggs’ long term growth prospects. The strong recovery in trading shows the brand’s strength. Management is looking to open a 100 net new stores this year as well as continue to develop its delivery channel which has taken off during the pandemic. Our TP rises to 3770p (previously 3137p), reflecting the upgrades.