MASTERS IN FINANCE EQUITY RESEARCH JERÓNIMO MARTINS, SGPS COMPANY REPORT PORTUGAL RETAIL 30 DECEMBER 2011 STUDENT: ALEKSANDRA KOWALIK
[email protected] Under the Polish umbrella… Recommendation: BUY Vs Previous Recommendation BUY Escaping from the Portuguese problems and Price Target FY12: 14.32 € securing long term growth. Vs Previous Price Target 14.67 € . European debt crises. European playground is very Price (as of 30-Dec-11) 12.79 € shaky. Investors are more chary and policymakers struggle to earn Reuters: JMT.LS Bloomberg: JMT PL back their confidence. Our valuation incorporates crisis-related 52-week range (€) 10.61 - 14.83 risks through 4 different scenarios. Thanks to leveraged position in Market Cap (€m) 8048.660 Poland, the Portuguese reality has diminishing impact on EV. Outstanding Shares (m) 629.293 Source: Bloomberg . Polish growth story to be continued. Biedronka is not only the market leader with 12% share of overall market, but foremost it has the dominant position within the constantly winning market share discount retail format (currently 15% share of overall market). Accounting for 82% of JMT value, Biedronka is expected to growth in our base scenario at CAGR of 19% in the next 5 years . Competitiveness crucial in Portugal. Pingo Doce and Recheio are likely to benefit from the shift in consumption towards takeaway, ready-to-eat and private label food products. However, their EBITDA margins have to decrease to remain competitive. Source: Bloomberg . Operational excellence. Jerónimo Martins beats its (Values in € millions) 2010 2011E 2012F Revenues 8 691 9 987 11 324 st competitors (1 place in our ranking) in terms of operational EBITDA 653 776 792 efficiency, which is a managerial spotlight.