Jumbo published H1 numbers showing sales up 20% yoy (already known); EBITDA +27% yoy and net income +36% yoy. Citing several factors, namely Q3-to-date trading, the deadly floods in Thessaly, and the heavyweight Xmas season ahead, management lowered its sales guidance to +12% yoy (from +15%) but raised net income guidance to +15% yoy (from +10%), thanks to the gross margin dropping less than -200bps yoy under previous guidance.

’If you cannot explain it simply, then you do not understand it well enough.’’ Testing ourselves, we share our understanding of each Greek investment case we cover within a few lines.
Conclusions: Our base case scenario is materializing, i.e., Mitsotakis administration renewing its mandate and Greece avoiding a recession. Equities have re-rated and are +36% YTD, so now…

What’s new? Jumbo’s monthly trading update showed May sales growth picking up compared to April, and YTD sales +22% yoy. This is higher than FY guidance for sales growth of +15% yoy. Management announced an additional E0.322 DPS out of 2022 earnings, bringing total DPS paid in 2023 at E1.477 (5.9% yield @ current price). As mentioned in the press release, neither the unstable weather nor the pre-election period were strong enough headwinds to prevent sales from growing on a double-digit rate in May.

What’s new? Jumbo published full 2022 accounts with sales at E949m/+14% yoy (as guided), EBITDA at E337m/+10% yoy and net income at E249m/+15% yoy. These are all record numbers, including the gross margin at 55.9% (+20bps yoy). Guidance for 2023 was reiterated for sales/gross margin/net income at +15% yoy/54%/E270m-E275m. As was management’s assessment of the consumer problems brewing underneath the sunshine.
Cash flow lagged. Equity cash flow stood at E125m or 4.5% yield on market cap; with EBITDA to Cash flow conversion back to 2019 levels of 37%. Working capital outflow = 27% of EBITDA explains the delta vs FCFE of E283m in 2021. We consider the 2022 indicative of sales growth and higher inventory prices mainly in H1.
Conclusion. We reiterate our OWN IT (OI) with our price target at E30 (from E29). Our valuation is based on 9% discount rate and 1% terminal growth (both unchanged). On our valuation, shares are trading 11.9x EPS (x-cash) and 8.9x EBITDA 2023E compared to current-price multiples of 7.9x EPS and 5.8x EBITDA 2023; while offering a 5.7% dividend yield.

What’s new? Jumbo provided the trading update for February and sales/gross margin/net income guidance for FY 2023. When management urged investors on Feb 8 not to extrapolate January’s +45% yoy sales growth into the rest of the year, we could not imagine this meant February would still grow by +35% yoy, bringing sales in the first two months of 2023 up by +40% yoy. To be fair, part of this impressive growth is due to the favorable base effect caused by several Covid-related restrictions still in place in the first two months of 2022.