EXECUTIVE SUMMARY
AGGRESSIVE NETWORK EXPANSION…, EARNINGS GROWTH ABOVE FORECASTS
A record opening of 27 stores in 2021
After a decline of -1.0% in H1-21, Label Vie recorded an important recovery in its activity in H2-21 of +14.2%. In this context, the Group's consolidated revenue rose by +6.8% in 2021 to MAD 11,758 Mn. These Achievements are in line with our initial forecasts which anticipated an increase in revenue of +6.5%. At the origin of this performance, the sustained development of the distribution network through the opening of 27 new stores in 2021 against only 5 in 2020. In more detail, these are 25 supermarkets, 1 hypermarket and 1 Atacadao. To this end, the Group had 136 points of sale at the end of December 2021.
A profit above MAD 400 Mn…, higher than forecasts
In terms of profitability, the Group's gross margin stood at 20.6% compared to 20.0% in 2020, i.e. an increase of +0.6 point. This is attributed to the improvement of the distributor's bargaining power with regard to its suppliers reflected in the drop in the COGS/Revenue ratio of -0.7 point from 82.0% in 2020 to 81.3 % in 2021. In this context, the distributor's EBITDA crossed the threshold of MAD 1 Bn for the first time to MAD 1,037 Mn, i.e. an EBITDA margin of 8.8% against an average of 7.7% over the last 4 years.
The Group's NIGS shows a significant increase of +23.3% to MAD 407 Mn, higher than our initial estimate of MAD 360 Mn. This gap is largely explained by a better than expected improvement in Label Vie's financial income of MAD +29 Mn, rising from MAD -16 Mn in 2020 to MAD +13 Mn in 2021 under the positive effect of financial investment revenue.
Despite the increase in the DPS 2021 of +17.6% to MAD 70.4, the stock remains unattractive in terms of yield through a D/Y of 1.4%.
Two main announcements during the analysts conference
In addition to the aggressive expansion of its distribution network, Label Vie should benefit from two main levers on the MT :
- The creation of a REIT during 2022 allowing it to generate a capital gain of MAD 267 Mn following the transfer of 17 operational assets and 6 under development;
- The implementation of a global digitization program by 2024 which should have a positive impact on margin levels.
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