Staple Retail

Staple Retail equity research

Explore the most viewed and latest equity research and media content for companies within the Staple Retail sector. Stocks in this sector provide goods and services in the food wholesale and drug retail industries.

Staple Retail equity research

Latest Content

Tesco

Strong end to FY17/18; Booker integration is valuation accretive

Tesco has continued its positive lfl momentum in Q4. Considering management’s success in the implementation of the turnaround plan, we take a more positive view on the company’s profitability going forward. Booker’s financials have also been integrated into our model. Moreover, the company looks much healthier today considering better than expected working capital management and its ability to reduce pension and debt obligations. Our stock recommendation is reset upwards to ‘Reduce’.

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19 Apr 18
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Carrefour

Poor Q1 results

Carrefour reported poor Q1 results yesterday. Higher than expected lfl sales slowdown in almost all operating geographies is concerning. Although the new CEO needs to deliver ‘on the ground’ results to regain investors’ sentiment, we still maintain our belief in him and reiterate our earlier position that not much should be expected before the H1 FY18 results. We will reduce the estimates but maintain our positive recommendation on the stock.

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12 Apr 18
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Jeronimo Martins SGPS

Soft Q4: best placed to tackle competitive and regulatory headwinds

Jeronimo Martins reported Q4 and FY17 results below our estimates. We believe the top-line should continue to benefit from the strong consumer environment in Poland (barring the impact of the Sunday trading ban) and group-wide investment in value propositions and promotional activity. However, the EBITDA margin is likely to be under pressure going forward. We have tweaked our estimates slightly but maintain the stock recommendation.

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06 Apr 18
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Conviviality

Gone into administration – read-across for pubs/restaurant & soft-drink companies

Conviviality released an RNS late yesterday effectively saying that it had failed to secure the necessary funding from institutional investors. This morning it has confirmed the appointment of administrators. Conviviality through its Matthew Clark and Bibbendum subsidiaries is the dominant on-trade supplier to the UK hospitality sector, serving around 23,000 outlets out of a market size of c.45,000. It was thus in the hospitality and drink manufacturers interest that Conviviality secured the necessary funding, both from a supply and competitive pricing perspective. The fact that it has not will have clear short term supply issues for both sectors. Given wider consumer and cost related challenges currently facing the sector and the significance of Easter trading this is clearly a negative of varying degrees for the quoted pubs & restaurant sector. Our understanding is that the majority, if not all, of the pubs and restaurant stocks have exposure to Conviviality in terms of drinks supplies. At a drinks manufacturer level, a cursory look down the products that Matthew Clark lists on its website would suggest the flowing soft drink companies also have a distribution relationship with the business – AG Barr (primarily the Funkin cocktail product), Britvic (J2O and various other brands) and Fevertree.

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29 Mar 18
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Galenica

Strong finish to the year; heightened competition in FY18

Vifor Pharma released a good set of FY17 results in which revenue and profitability came in ahead of our expectations. Total revenue surged by 15% (190bp above AV’s estimate vs. guidance of >10%) led by strong growth momentum in the intravenous/IV iron drug franchisee. Vifor’s flagship product ‘Ferinject/Injectafer’ grew 24.6% (c.32% of sales) on the back of robust demand in the US (+35%; c.21% of drugs sales) and Europe (+17%). Although sales for Venofer slumped 11.8% (c.8% of sales; impacted by cannibalisation from Ferinject), the drug continued to be the leading IV iron brand in volume terms (hospital segment: 54% share; dialysis segment: 92% share). Oral iron drug ‘Maltofer’ grew by 6.9%, benefiting from the favourable phasing of shipments. Sales for hyperkalaemia drug ‘Veltassa’ reached CHF51.7m in the second year of launch (vs. CHF7.4m in FY16) as more prescriptions were dispensed in the US. Similarly, continued global roll-out of Velphoro led to a 48.6% uptick for the phosphate binder drug (strong demand in the US, Japan and the EU5 markets). After Mircera achieved a high penetration rate within Fresenius Medical Care/FMC dialysis clinics in the previous year (c.90%), the drug grew by a meagre 3.4% in FY17. As far as profitability is concerned, the reported EBITDA slumped to CHF280.4m (vs. FY16: CHF322.2) due to planned investments of CHF231.5m to support the launch/ramp-up of Veltassa. Excluding these costs, EBITDA increased by 17.7% (vs. guidance of >10%), benefiting from strong top-line growth and strict cost containment measures. Management has proposed a dividend of CHF2 per share for the year. For FY18, net sales and reported EBITDA are anticipated to grow by >10% (at CER) and >20%, respectively.

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28 Mar 18
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Sonae SGPS

Solid revenues do not percolate to earnings

The company’s achievements in 2017 exceeded our expectations revenue-wise, while its bottom line was lower than our expectations due to the impact of non-recurrent effects in 2016.

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23 Mar 18
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Morning Song

Cello Group (CLL LN) Health(y) | Conviviality (CVR LN) Emergency fund raise | Earthport (EPO LN) New York money transmitter license granted | EMIS Group (EMIS LN) Relief at update, valuation still attractive but needs catalyst | IDE Group (IDE LN) Management changes | Karolinska Development AB (KDEV SS) Phase II fest ahead but debt concerns remain: forecasts withdrawn | M&C Saatchi (SAA LN) Look deeper | Safestyle UK (SFE LN) Arrival of new disruptive competition leaves us cautious on outlook | Tribal Group (TRB LN) Continued progress; dividend reinstated

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22 Mar 18
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Conviviality

Updated view post today’s update

A brief holding statement from Conviviality this morning. It effectively seeks to reassure that discussions with lenders and the HMRC are progressing in a constructive manner. We also note a reference to PWC undertaking a review of the business and its future funding requirements. Whilst not referenced, we would also expect PWC to be carrying out a full independent audit of historic and current accounting to reassure investors and lenders and moreover, before any appropriate value can be ascribed to the business. Not surprisingly there is an acknowledgement this morning about the possibility of an equity raise to recapitalise the business. The update highlights that the shares remain suspended. We feel an equity raise is inevitable with which may come alongside management changes given there have been serious failings on a number of fronts. Based on what we know to date, in what is now a very fluid situation credibility and trust are completely lacking. Despite the calamity of recent weeks we do not subscribe to the doomsday scenario. Ultimately Conviviality is a £1.7bn revenue business with its incumbent structures, supply chain, business relationships and a strong portfolio of retail outlets which is difficult to recreate and as such there is undoubtedly value in the business. We do however expect the short term fall out of this unpalatable mess to be ugly. Given this and the need for more funding / forecast clarity we put our recommendation, target price and forecasts under review.

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