POSITIVE ACHIEVEMENTS, COMFORTING OUR BUY RECOMMENDATION
Revenue crossing the MAD 11 Bn threshold
In FY 2020, Label Vie is maintaining its positive growth dynamic in an unprecedented context marked by the Covid-19 health crisis. The distributor's revenue crossed for the first time the threshold of MAD 11,000 Mn to MAD 11,012 Mn against an AGR estimate of MAD 11,370 Mn (Cf. LBV - H1 2020 Results). This represents a 5.9% growth in 2020.
This evolution is driven by two segments, namely supermarkets and hypermarkets, whose sales increased by 12% and 13% respectively. In contrast, the sales of hyper-cash stores were almost stable at 1%, while revenues generated by gas stations suffered from the lockdown period, with a significant drop of -37%.
The continued growth in earning power
The activity growth was reflected in an upward acceleration of the EBITDA by 15.2% to MAD 910 Mn, i.e. an EBITDA margin of 8.3%, up 0.7 pt. At the origin of this performance, an improvement in purchasing conditions combined with good control of operating expenses.
The NIGS increased by 5.9% to reach MAD 330 Mn versus an initial estimate of MAD 352 Mn. This less sustained growth than that of the EBITDA is due to the amortization of the donation to the Covid-19 fund of MAD 50 Mn and non-current expenses related to the management of the pandemic.
Raising the DPS to MAD 60, a positive signal for 2021
In 2020, Label Vie raised its DPS by 6.5% to MAD 60. This increase remains in line with that of profits, especially since we are witnessing a lag in CAPEX under the effect of the health crisis.
Maintaining of our BUY recommendation
We maintain our BUY recommendation of the stock with a target price of MAD 3,847, i.e. an upside of 19%. Revenue growth will be sustained in 2021 by the solid expansion of the distribution network with 20 new openings in comparison to 5 in 2020.
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