Edenred (NR, A-) 1H (to June) results follow up

Little support for equities(-8%) and it is not on levels (adding to a -20% slide this year, P/E is not rich vs. history). Some follow through to Pluxee {PLX FP Equity} - though vs. normal vol on earnings, its mute.

There are couple of points equities might be focusing on;

• FY EBITDA guidance is firm at +12-18% and in line with prior guidance for >+12% growth BUT the firm 1H leaves 2H growth a more mute 3.6%-15.1%yoy. At the lower end that would be the first time in 4years Edenred books single digit growth.
• Regulation (always a talking point for these co's);
• Italy was positive was our read (it said double digit growth resting our concerns).
• France seems to have stirred some. It said consensus was reached pre-election with the government on a few reforms - including balancing merchant vs. employer fees (Edenred collects from both) and digitization. With hung parliament (no absolute majority) those reforms are in the air. All it says on this is "the current system is very okay for Edenred and for the industry, and it would be better for the industry and for Edenred if the reform is voted, but we can live without".
• Brazil there were some technicalities on if voucher players are working around a ban on negative commissions which shut the door to companies paying in cash directly for voucher players/payment processors to handle transactions or provide services (Edenred saying this was to block discounts at the employer level). It expects clarification from regulators on what incentives at employee level can be used.
• More broadly its noted the market it operates in is fairly unregulated which means discussions to regulate more always come up in various geographies from time to time. But regardless those are all aimed at and on the back of further penetration/growth...which is net positive for it. We agree with market growth but Edenred is #1 player on employee benefits...regulation tends to focus on encouraging more competiton into the market.