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CONSUMER CYCLICALS: Adecco Group (Baa1 Stable/BBB+ Neg) FV & final thoughts

CONSUMER CYCLICALS
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WNG €300m 8Y IPT +155a vs. FV +125 (-30)

  • We do NOT see value at FV - which is set based on secondary (spread wide on the low cash px lines).
  • Note 3Q earnings come on 5th of Nov.
  • CoC, 3m par call
  • UoP is left broad but as we said on Friday, this likely refi for the €430m (outstanding) Dec '24 line.

Hard to not go through the roadshow and share our concerns for headline growth. As we said it has attempted to diversify outside traditional recruitment (77% of revenues, 65% of EBITA) through Akkodis (15%, 22%) and LHH (8%, 12%) - but latter two have had falling sales for last ~1yr. Akkodis was in part built through the acquisition of AKKA - it issued €1.5b to finance that and leverage has remained elevated since at net/gross 3.8x/4.1x (on consensus -7% fall in earnings this year). Note it quotes leverage ex. leases in roadshow (at net 3.0x) and likely on trailing earnings. It has €511m in leases.

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WNG €300m 8Y IPT +155a vs. FV +125 (-30)

  • We do NOT see value at FV - which is set based on secondary (spread wide on the low cash px lines).
  • Note 3Q earnings come on 5th of Nov.
  • CoC, 3m par call
  • UoP is left broad but as we said on Friday, this likely refi for the €430m (outstanding) Dec '24 line.

Hard to not go through the roadshow and share our concerns for headline growth. As we said it has attempted to diversify outside traditional recruitment (77% of revenues, 65% of EBITA) through Akkodis (15%, 22%) and LHH (8%, 12%) - but latter two have had falling sales for last ~1yr. Akkodis was in part built through the acquisition of AKKA - it issued €1.5b to finance that and leverage has remained elevated since at net/gross 3.8x/4.1x (on consensus -7% fall in earnings this year). Note it quotes leverage ex. leases in roadshow (at net 3.0x) and likely on trailing earnings. It has €511m in leases.

Keep reading...Show less