Equity Research Me xico Quarterly Report July 29, 2020 SORIANA www.banorte.com Impacted by rents relief and “Julio Regalado” @analisis_fundam . Soriana reported below expectations, due to 2 months of rents relief Consumer and Telecom granted to its tenants in the real estate business (1.8% sales; 17% of Valentín Mendoza EBITDA), as well as drops in "Julio Regalado" campaign Senior Strategist, Equity
[email protected] . 5 stores closed during the quarter of those that were still pending Juan Barbier under the conditions imposed by COFECE. 3Q20 will reflect a similar Analyst impact from reliefs and weakness in its summer campaign
[email protected] . We trimmed our estimates, after incorporating these results and assuming a challenging 2H20. We are lowering our PT2020 to $23.00 HOLD (FV/EBITDA 2021E of 5.2x equal to current valuation). HOLD Current Price $18.05 PT 2020 $23.00 Dividend 2020e Dividend Yield (%) Pressures in profitability that could continue. In June, Soriana recognized Upside Potential 27.4% half the impact on 2 months of rents reliefs granted to its tenants (the remaining Max – Mín LTM ($) 27.50 – 16.14 Market Cap (US$m) 1,453.6 will be registered in July). Its “Julio Regalado” campaign, which kicked-off in Shares Outstanding (m) 1,800 June, declined a high-single-digit –due to challenging macroeconomic Float 13.8% Daily Turnover US$m 2.0 environment-. And also carried out the closure of 5 pending stores related to its Valuation metrics TTM FV/EBITDA 5.2x divestment program required by COFECE. That said, sales grew 1.4% y/y to P/E 10.1x MXN 39.637 billion, on the back of a 2.6% advance in SSS, offsetting a 1.0% y/y contraction in sales floor.