Research, Charts & Company Announcements
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.
Outperformance in the bag
24 Mar 17
IG Design has had a very good second half trading and has issued a year-end update indicating that numbers will exceed market estimates. We have lifted our FY17 and FY18 numbers by 8-10% at the pre-tax and EPS levels, following an 11% uplift to earnings with the interims. Particularly notable is the comment on strong cash flow, with the group reaching its target of average leverage less than 2.5x EBITDA two years ahead of plan. With the earnings and cash flow momentum, strong balance sheet and progressive dividend, there is good potential for further share price upside.
24 Mar 17
We note the share transaction yesterday, and think the stock will benefit from the increased liquidity. We continue to believe there is good valuation upside to the shares. However, we are terminating coverage of Watkins Jones from this morning and withdrawing our forecasts from the market.
Management hopes for a better 2017
21 Mar 17
BMW’s final 2016 accounts were, compared to what we had anticipated, slightly disappointing. We had said so when preliminary numbers were released earlier this month. Today’s guidance for 2017 shows slight growth in all categories, i.e. volume, revenue and consolidated pre-tax earnings are all projected to go up. Reading between the lines, the statement suggests that the EBIT margin generated by the Automobiles division is likely to fall further (it was down from 9.2% to 8.9% in 2016). Whether Financial Services can again increase its margin (it was up by 0.1pp to 8.4% last year) remains to be seen and will also depend on the price development of used vehicles.
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.