Jeronimo Martins SGPS S/A

Jeronimo Martins S.G.P.S. is a holding company. Through its subsidiaries, Co. is engaged as a food distribution company with operations in Poland and Portugal. Co. operates in four segments: Portugal Retail, which comprises the business unit of JMR - Gestao de Empresas de Retalho, SGPS, S.A. (Pingo Doce supermarkets); Portugal Cash & Carry, which includes the wholesale business unit Recheio; Poland Retail, which includes the business unit with the brand Biedronka; and Others, which includes marketing services and representations, restaurants in Portugal, health and beauty retail in Poland, and its retail business in Colombia.
  • TickerJMT
  • ISINPTJMT0AE0001
  • ExchangeEuronext Lisbon
  • SectorFood & Drug Retailers
  • CountryPortugal

Analysts

Research Team

Focus: transferring coverage of OPAP with a BUY and a new EUR 12.2 PT; keeping our BUY on Mytilineos, with lower EUR 12.5 PT; Polish retail sector – retail tax saga – season 2; National Bank – feedback from investor day

HEADLINES: • OPAP: the odds are good (BUY - transfer of coverage) • Mytilineos: plant(ing) the seed (stays BUY) • Polish retail sector: retail tax saga - season 2 • National Bank: feedback from investor day • Rostelecom: recommends RUB 2.5 DPS from 2018 NI NEUTRAL • Petrol Group: 1Q19 review - strong quarter, 13% EBITDA beat POSITIVE • JSW: 1Q19 financial results - above consensus on better cost performance POSITIVE • 11 bit studios: 1Q19 results in line with our expectations, below the market consensus NEUTRAL • Energa: 1Q19 preliminary results - 12% EBITDA miss, due to weak sales resul...

Lukasz Wachelko, CFA

WOOD Flash – Polish retail sector: retail tax saga – season 2

Yesterday morning (15 May), the General Court of the European Union caught the market, corporates and Polish lawmakers by surprise, by annulling the European Commission’s ruling to block the introduction of a progressive retail tax in Poland. As a result, we see a material probability that, from January 2020, Polish retailers will pay tax on their offline revenues, at a rate between 0.8% and 1.4%. We expect the largest hit for the FMCG retailers (14-17% of EBITDA in the worst case, on our estimates), while the impact on non-food players should be muted (3-5%).

Christian Guyot

INVEST SECURITIES - JERONIMO MARTINS : Un regain de momentum largement anticipé - VENTE, OC 12,9€ (vs 11€)

Research Team

The Rear-View Mirror – EME markets: Greek equities stand out in April

EME Equity Market – April 2019 Market performance – Greece up 7.2% mom in EUR terms in April 2019. The MSCI EME gained 2.4% in April, and was outperformed by the Greek ASE index, which rose 7.2%. The second-best performing market in EME was Romania, with the BET index up 5.3% mom, followed by the Russian MOEX (+4.1% mom), the Polish WIG20 (+1.4% mom) and the Hungarian BUX (+1.3% mom). The Czech PX index was flat mom; while the Turkish ISE30 dropped by 4.5% mom, but this was related to the depreciation of the TRY against the EUR, as the index was up 1.2% mom in TRY terms.

Research Team

Focus: Russia macro – borrowing cost update; CCC’s 1Q19 prelims as weak as we had expected, but way below consensus; Jeronimo Martins’ 1Q19 results ahead of expectations on stronger lfl in Poland; AmRest’s 1Q19 preliminary sales up 30% yoy

HEADLINES: • Russia macro: borrowing cost update • CCC: 1Q19 prelims as weak as we had expected, but way below consensus • Jeronimo Martins: 1Q19 results ahead of expectations on stronger lfl in Poland POSITIVE • AmRest: 1Q19 preliminary sales up 30% yoy, 13% excluding M&A NEUTRAL • Akbank: 1Q19 results summary NEUTRAL • Erdemir: 1Q19 financial results above consensus, with strong FCF POSITIVE • Kruk: takeaways from the meeting with management, quite constructive feedback NEUTRAL • Rostelecom: refined FCF calculation for the dividend policy NEUTRAL • Czech banks: risk of special bank taxes r...

Lukasz Wachelko, CFA

WOOD Flash – Polish retail sector: retail tax saga – season 2

Yesterday morning (15 May), the General Court of the European Union caught the market, corporates and Polish lawmakers by surprise, by annulling the European Commission’s ruling to block the introduction of a progressive retail tax in Poland. As a result, we see a material probability that, from January 2020, Polish retailers will pay tax on their offline revenues, at a rate between 0.8% and 1.4%. We expect the largest hit for the FMCG retailers (14-17% of EBITDA in the worst case, on our estimates), while the impact on non-food players should be muted (3-5%).

Christian Guyot

INVEST SECURITIES - JERONIMO MARTINS : Un regain de momentum largement anticipé - VENTE, OC 12,9€ (vs 11€)

Research Team

The Rear-View Mirror – EME markets: Greek equities stand out in April

EME Equity Market – April 2019 Market performance – Greece up 7.2% mom in EUR terms in April 2019. The MSCI EME gained 2.4% in April, and was outperformed by the Greek ASE index, which rose 7.2%. The second-best performing market in EME was Romania, with the BET index up 5.3% mom, followed by the Russian MOEX (+4.1% mom), the Polish WIG20 (+1.4% mom) and the Hungarian BUX (+1.3% mom). The Czech PX index was flat mom; while the Turkish ISE30 dropped by 4.5% mom, but this was related to the depreciation of the TRY against the EUR, as the index was up 1.2% mom in TRY terms.

Filipe Rosa

Jerónimo Martins: Bumpy Q1 over...time for the stimulus

JMT’s Q1 EBITDA topped our estimates by 4% and BBG consensus by 2% on better LfLs and margins for Biedronka and for domestic distribution. We were particularly impressed by Biedronka’s margin resilience in a quarter with a -1.1% LfL, which points to some upside risk to our flat margin forecast for FY19e as LfL should pick up to 5.7% over the next three quarters. However, the gross margin comp should get tougher and we also expect wage inflation to accelerate and thus we prudently made very limited changes to our forecasts. The shares rose 6% on the solid numbers and are up 43% YTD, topping the...

Artur Amaro ...
  • Nuno Castro

JERONIMO MARTINS - 1Q19 results post comment: solid performance despite less 7 trading days in Poland and the absence of Easter. FY2019 priorities and outlook were reiterated.

Research Team

Focus: transferring coverage of OPAP with a BUY and a new EUR 12.2 PT; keeping our BUY on Mytilineos, with lower EUR 12.5 PT; Polish retail sector – retail tax saga – season 2; National Bank – feedback from investor day

HEADLINES: • OPAP: the odds are good (BUY - transfer of coverage) • Mytilineos: plant(ing) the seed (stays BUY) • Polish retail sector: retail tax saga - season 2 • National Bank: feedback from investor day • Rostelecom: recommends RUB 2.5 DPS from 2018 NI NEUTRAL • Petrol Group: 1Q19 review - strong quarter, 13% EBITDA beat POSITIVE • JSW: 1Q19 financial results - above consensus on better cost performance POSITIVE • 11 bit studios: 1Q19 results in line with our expectations, below the market consensus NEUTRAL • Energa: 1Q19 preliminary results - 12% EBITDA miss, due to weak sales resul...

Research Team

Focus: Russia macro – borrowing cost update; CCC’s 1Q19 prelims as weak as we had expected, but way below consensus; Jeronimo Martins’ 1Q19 results ahead of expectations on stronger lfl in Poland; AmRest’s 1Q19 preliminary sales up 30% yoy

HEADLINES: • Russia macro: borrowing cost update • CCC: 1Q19 prelims as weak as we had expected, but way below consensus • Jeronimo Martins: 1Q19 results ahead of expectations on stronger lfl in Poland POSITIVE • AmRest: 1Q19 preliminary sales up 30% yoy, 13% excluding M&A NEUTRAL • Akbank: 1Q19 results summary NEUTRAL • Erdemir: 1Q19 financial results above consensus, with strong FCF POSITIVE • Kruk: takeaways from the meeting with management, quite constructive feedback NEUTRAL • Rostelecom: refined FCF calculation for the dividend policy NEUTRAL • Czech banks: risk of special bank taxes r...

Research Team

Focus: Turkish Banks - putting CBT swaps into context for the banks; Banca Transilvania – first read on the 1Q19 parent results - strong beat due to provision reversals; PKP Cargo’s CEO does not exclude raising EBITDA forecasts for 2019E

HEADLINES: • Turkish Banks: Putting CBT swaps into context for the banks • Banca Transilvania: first read on the 1Q19 parent results - strong beat due to provision reversals • Kety: 1Q19 results - better than the preliminary figures, broadly in line with our forecasts POSITIVE • PKP Cargo: CEO does not exclude raising the EBITDA forecasts for 2019 following 1H19E POSITIVE • Benefit Systems: incentive programme for foreign companies' managements NEUTRAL • Tofas: to adjust production into two shifts, CEO comments on the domestic market NEUTRAL • MTS: plans to invest in drones, according to Ko...

Research Team

Focus: Benefit Systems’ 4Q18 beat vs. our EBITDA on a slightly lower loss in fitness, reports very good new cards additions in 1Q19; Hellenic Petroleum – no firm bids received; Kety’s 4Q18 results slightly better than the prelims

HEADLINES: • Benefit Systems: 4Q18 beat vs. our EBITDA on a slightly lower loss in fitness POSITIVE • Benefit Systems: very good new cards additions in 1Q19 POSITIVE • Hellenic Petroleum: no firm bids received POSITIVE • Kety: 4Q18 results slightly better than the prelims, DPS proposal of PLN 22.5 (6.5% dividend yield) POSITIVE • Tauron: 4Q18 results in line with preliminary numbers NEUTRAL • Poland macro: increasing probability of 100% OFEs' assets transfer to savers' accounts POSITIVE • Globalworth: buys two office buildings in Poland for EUR 170m POSITIVE • Polish retail: Lidl to launch onl...

Research Team

WOOD Morning (6 February)

HEADLINES: • MLP Care: robust even in a recession (stays BUY) • MONETA Money Bank: posts strong 4Q18, strong guidance and raises dividends guidance POSITIVE • Rosneft: 4Q18 - earnings suppressed by more write-downs, but FCF & leverage reduction still on track • Raiffeisen Int.: posts mediocre preliminary 4Q18 net profit, with some negative one-offs NEGATIVE • CME: 4Q18 results review - OIBDA up 19% yoy, in line with guidance and our estimates NEUTRAL • OMV: 4Q18 results and EUR 1.75 DPS proposal • OMV Petrom: 4Q18 results and an 8% dividend yield • Lotos: 4Q18 preliminary estimates, bette...

JERONIMO MARTINS SA reduced its risk exposure resulting in an upgrade to Slightly Positive

JERONIMO MARTINS SA (PT), a company active in the Food Retailers & Wholesalers industry, reduced its market risk and raised its general evaluation. The independent financial analyst theScreener awarded an improved star rating to the company, which now shows 4 out of 4 possible stars; its market behaviour has improved and can be considered as defensive. theScreener believes that this new assessment merits an overall rating upgrade to Slightly Positive. As of the analysis date April 26, 2019, the closing price was EUR 14.80 and its potential was estimated at EUR 15.54.

Ford Equity International Rating and Forecast Report

Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind each recommendation and reflect the fundamental and price data as of the last trading day of the week...

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Expert Corporate Governance Service (ECGS)

Jeronimo Martins SGPS April 11th, 2019

In item 4, shareholders are called to an advisory vote on the remuneration report. We have serious concerns over the variable remuneration structure, as it exclusively depends on annual results and no limits to the maximum bonus are disclosed. In our opinion, the executive remuneration is not adequately linked to long-term results, hence he recommend opposition. In item 5, the AGM is called to appoint the members of all corporate bodies (Board of Directors, Board of General Meeting and the statutory auditor) in a single item. The members of the Board of Directors and the Board of General Meet...

Jeronimo – Proxinvest Corporate Governance Rating ® : C

Proxinvest Corporate Governance Rating ® helps investors integrate governance into their investment decision and identify governance risks and opportunities within their portfolio. Proxinvest Corporate Governance Rating ® Service rates European issuers through the analysis of four main themes : Ownership & Shareholder rights, Board & Committees, Audit & Process, Remuneration. Each theme is rated taking into account several comprehensive sub-categories. Our unique two-step process to achieve each rating includes a first step quantitative valuation and a second step qualitative filter...

Expert Corporate Governance Service (ECGS)

Proxy Report - 12/04/2018

In item 2, the Board proposes to distribute a dividend of € 0.6132 per share on 2017 results, by 1.3% higher than the dividend paid in the previous year despite a 35.0% decrease in consolidated net income. The dividend distribution amounts to almost 100% of the consolidated net income (€ 385 million), which is significantly higher than the disclosed Company's policy to distribute from 40% to 50% of consolidated net income. We regret that the proposed dividend distribution is not fully covered by free cash flow (€ 249 million in 2017). However, dividends were fully covered by net earnings and c...

Valérie GASTALDY

Analyse court terme - JERONIMO MARTINS SGPS SA : La tendance de fond est clairement orientée à la baisse.

La tendance de fond est clairement orientée à la baisse. Les prix baissent à nouveau, mais le mouvement est devenu hésitant. Le prochain support est à 10,728 €. La tendance de fond serait remise en cause en cas de franchissement de 13,195 €.

Valérie GASTALDY

Short term view - JERONIMO MARTINS SGPS SA : The background trend is clearly bearish.

The background trend is clearly bearish. Prices are falling again, but the movement has become hesitant. The next support is at €10.728. The background trend would be questioned should prices rise above €13.195.

Valérie GASTALDY

Analyse court terme - JERONIMO MARTINS SGPS SA : La tendance de fond est clairement orientée à la baisse.

La tendance de fond est clairement orientée à la baisse. Les prix baissent à nouveau, mais le mouvement est devenu hésitant. Le prochain support est à 10,728 €. La tendance de fond serait remise en cause en cas de franchissement de 13,195 €.

Valérie GASTALDY

Short term view - JERONIMO MARTINS SGPS SA : The background trend is clearly bearish.

The background trend is clearly bearish. Prices are falling again, but the movement has become hesitant. The next support is at €10.728. The background trend would be questioned should prices rise above €13.195.

Valérie GASTALDY

Analyse moyen terme - JERONIMO MARTINS SGPS SA : Le mouvement se poursuit.

La tendance est baissière. Le mouvement se poursuit. Le prochain objectif est à 12,148 €, puis 9,420 €. Le franchissement de 17,317 € remettrait en cause la suite de la baisse.

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