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Research Tree provides access to ongoing research coverage, media content and regulatory news on RECKITT BENCKISER GROUP PLC. We currently have 19 research reports from 4 professional analysts.
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RECKITT BENCKISER GROUP PLC
RECKITT BENCKISER GROUP PLC
Reckitt Benckiser, Overvalued Now, Sell.
14 Feb 17
Reckitt Benckiser’s (RB) Q4-16 result was disappointing, and is a prelude to a difficult year ahead we believe, as RB will struggle to deliver upon its own growth targets, plus arrest the decline in Mead Johnson’s sales. Further, evidence of this acquisition being ‘successful’ is two years away, both from a growth and category perspective. Trading on some 18x FY-17 EV/EBITDA, RB also looks expensive to us, especially since its growth model has been dented. A rating of 16x is more appropriate, which gives us our target price of 6000p, we therefore ascribe a Sell rating to the stock.
13 Feb 17
"Like magic, Donald Trump has pulled the next rabbit out of his hat, promising a 'phenomenal' corporate tax announcement in the next 'two or three' weeks. Its likely to come with his February State of the Union Address to Congress on 28th February, but investors are not seen having the patience to wait for the formal pronouncement. A steadier, but still rather shell-shocked, Euro permitted oversold French bonds to rally, having been preceded on Friday by news from China that its January exports rose 7.9% on last year accompanied a 16.7% leap in imports, which altogether was enough to power all three principal US indices to new record highs having already been boosted by a flow of strong corporate earnings releases. European politics, of course, remains the obvious 'fly-in-the-ointment', with most pundits now seemingly resigned to France's National Front leader, Marine Le Pen, succeeding to May's Presidential run-off. This, however, along with the undoubted complications faced in driving the President Trump's reflationary proposals through Congress, appears to have been temporarily pushed to the back of investor's minds, with early morning trading in Asia firmer right across the board, having had nerves calmed by President Trump informing Xi Jinping that the US would respect his 'One China' policy while also welcoming Japan's Abe to the White House. This leaves Europe simply to follow suit this morning, with all markets expected to open firmer once again. Macro releases due to today are few in number, with nothing coming from the UK, while Germany produces just its Monthly Buba report and the US details the outcome of its 3 and 6-month Bill Auctions. No significant UK corporate earnings or trading updates are due either, although some second-liners like Fidessa Group (FDSA.L), Lok'n Store Group (LOK.L), Plastics Capital (PLA.L) and Surface Transforms (SCE.L) are scheduled, which leaves London to just follow the international lead with the FTSE-100 seen rising between 10 and 15 points in early morning trade." - Barry Gibb, Research Analyst
$17bn For Mead Johnson Confirmed – +1% OSG in Q4
10 Feb 17
Reckitt Benckiser (RB/ LN, BUY, T/P 9000p) released their full year results this morning beating on both EPS and revenue. Sales for the full year increased 11.5% to £9,891m beating consensus forecast of £9,863m. EPS was at the top end of the range at 302p (vs 296p).
Delivering on message
02 Feb 17
With due regard for ultimate deal mathematics, Reckitt Benckiser’s (RB/ LN, BUY, T/P 9000p) announcement that it is in talks with American consumer health company Mead Johnson should be lauded. Reckitt has long stated that consumer health is a priority and it has been clear for some time that the company has more than adequate finances to execute a transformational deal in the sub-segment. Based on the company’s RNS, Reckitt Benckiser might be interested in paying up to $16.7bn/£13.3bn for Mead Johnson. This would be equivalent to 17x EV/EBITDA or around 4½x sales revenue. Using the US company’s 23% tax rate the NOPAT return would be 4.0%. Consensus EBIT for Mead Johnson in 2017 is $873m (source: Bloomberg) with sales of $3.7bn. As a result, the initial return on investment would be well shy of our target hurdle rate of 8.5% for international FMCG companies, which we assume to be similar to Reckitt Benckiser’s WACC.
A not so ‘Healthy’ Q3
02 Jan 17
An unsatisfactory quarter for Reckitt Benckiser, reporting one of the weakest underlying sales performances in recent times (lfl growth of 2% vs. consensus estimate of 2.8%; 4% in Q2 16 and 7% in Q3 15). This was even below its closest peers – Unilever recorded 3.2% underlying growth while P&G grew by 3% during the same quarter. The major disappointment stemmed from the waning Health segment while contraction in Home and Portfolio aggravated the woes further. However, Hygiene’s sustained growth momentum provided some solace. On the positive side, strong forex tailwinds (+15%, thanks to a falling sterling) pushed up sales that grew 17% on a reported basis to £2.6bn. From a geographical point of view, after growing moderately in the previous quarters (2% lfl in Q2 16 and 3% in Q1 16 vs. 5% in FY 15) Europe, North America and Australia/New Zealand (ENA) turned flat this quarter, impacted by a lower than expected Scholl/Amope uptake and a weak Russia. As a result, the Rest of ENA contracted 1% while North America remained flat. However, despite being held back by the HS issue in South Korea (mid single-digit growth shaved off from the overall uptick), developing markets (DvM) continued their surge, albeit slightly slower than in previous quarters (7% lfl vs. 8% in Q2 16 and 10% in Q1 16). Both China and India performed strongly with the former benefiting from an increasing penetration in e-commerce (30% of sales), while the latter from an uptick in Dettol and Harpic sales. Given the ongoing headwinds (weak Russia, HS issue in South Korea and the Scholl slowdown), management has lowered its sales guidance and is now targeting revenue growth of 4% lfl for FY 16 compared to the previously communicated “lower end of 4-5%”. On the margin front, guidance remained unchanged with a moderate operating margin expansion in H2.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Root & branch review – early margin positive
23 Feb 17
Unilever (ULVR LN, HOLD, T/P 3800p) announced yesterday that it will publish the findings of a root and branch review in April 2017. This is stated as being a result of the recent approach made to them by KraftHeinz (KHC US, N/RO), an offer which quickly lapsed.
A compelling global brand roll-out story
22 Feb 17
We believe that SuperGroup remains one of the most undervalued global brand roll-out stories within the UK retail sector. The stock trades at c20% discount to its UK peers on a 1YF EV/EBITDA basis despite best-in-class revenue growth and profit margins. SuperGroup operates a leading multi-channel proposition, has strong sales momentum across each channel and forecast risk remains on the upside. We initiate coverage on the shares with a buy recommendation and price target of 1898p, implying upside of 27.8% over the prevailing market price.
Despite offer lapse, Unilever remains under pressure
20 Feb 17
Unilever (ULVR LN, HOLD, T/P 3800p) announced yesterday that it is no longer subject to a £40 per share offer from KraftHeinz, which valued Unilever at 14x EV/EBITDA and a 24x P/E ratio. The announcement was made jointly with Kraft Heinz. While the offer lapse will probably prompt Unilever’s shares to open lower – they rose 13.3% on Friday – longer term changes may be more positive.
13 Feb 17
Surface Transforms* (SCE): H1 results confirm operational progress (CORP) | Premaitha Health* (NIPT): European diagnostics partnership (CORP) | Lok'nStore* (LOK): Filling existing stores, developing new ones (CORP) | Victoria* (VCP): Entry into the European flooring market (CORP) | eg solutions* (EGS): Exceptional H2 performance (CORP)