Medium-term guidance is unchanged. Pernod still expects top-line growth of 4-7% and operating leverage of 50-60bps margin expansion p.a. For FY20, in addition to expecting China and India to slow, management has incorporated some assumptions regarding US tariffs on EU spirits. Input cost headwinds remain. FY20 organic EBIT guidance is 5-7%; we forecast +6.7%. No comment on the upcoming Chinese New Year was made on the FY19 call. Although the 21% organic sales growth in FY19 was, in management’s words, “exceptional,” underlying trends in that market remain strong. The Chivas relaunch has been successful and the new premium brands’ route to market is delivering the intended benefits. Our cash flow estimates are revised down as a result of increased investment in capex and ageing inventories, as well as the €1bn share buyback and significant hike in the dividend. We are intrigued by the announcement that Pernod will open the first Chinese single malt whiskey distillery owned by an international spirits company; while the target market initially will be domestic consumers, we expect that in time Pernod will bring Chinese whiskey to other markets and could develop an entirely new category to compete with Japanese, Irish and American whiskies. Investment view. Our DCF fair value is €198, which gives us confidence that the current multiple, while high relative to history, can be sustained. We prefer Pernod over Diageo given better DCF support and greater optionality. Actions taken since Elliott disclosed its stake have been positive for shareholders.