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of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
CONSUMER STAPLES
new 29s are another +4 today and one of the few in consumer heading that way. It was issued at +295 and has moved +65 since. Hard for longs to blame anyone outside of Auchan who has soured both sentiment around French food but also RV/levels. We'd exercise caution on ITM.
- Margins are bottom of the pack (ex. Casino) and guidance is for it to stay there (at 2.5% on EBITDA). Reminder Auchan reported a 2.1% EBITDA margin (down from 3.5%) in 1H but it did have significant non-cash costs below that driving a operating loss.
- It's more exposed to France (87% vs. Auchan 50%) and has also taken on more troubled Casino stores than Auchan (294 vs. 98) - both pain points for Auchan results/cause of sell-off.
- Net leverage target of 2.5x is high for razor thin margins. Gross debt seems to have selective inclusion with us struggling to get to reported €3.4b particularly if we include in full €1.2b classed under "other financial debts". Reminder when it came to issue we tagged gross at a higher €4.5b leaving net leverage at 3.4x (vs. reported 2.6x).
- The €3.2b in real-estate it has seems to be used for operations (i.e. not standalone revenue generating like Auchan) and should therefore already captured in leverage metrics (on lower leases).
- Reporting clarity we'd rank close to the bottom of peers too.
Positives are a 1) no signs of operating losses in last 5 years 2) 20bp recovery in margins last year 3) lower leverage if we exclude Auchan's RE base. Net caution on co and levels, no firm view on the last point above
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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