Pepco Group 1H26 First Take: A beat to spark a positive market reaction

Research evidence excerpt

Pepco Group 1H26 First Take: A beat to spark a positive market reaction

J P M O R G A N CEEMEA Equity Research

21 May 2026

Pepco Group Overweight

PCOP.WA, PCO PW

1H26 First Take: A beat to spark a positive market Price (20 May 26):zl31.94

reaction Price Target (Sep-27):zl32.00

Our Take: Pepco's 1H26 results were robust, beating expectations. Gross profit CEEMEA Consumer

ACmargin expanded 251bps y/y, exceeding our and consensus forecasts by 58-63bps. Elena Jouronova, CFA

The company: 1) provided further detail on its recently upgraded FY26 guidance, (971) 4561-2010

while also upgrading gross profit margin and FCF expectations, 2) hiked its elena.jouronova@jpmorgan.com

expansion plans in Western Europe and Ukraine, 3) sees decent current trading Anastasia Tikhonova

trends (better than LPP (N)), and 4) has announced a plan for a EUR 400m one-time (44-20) 3493-8007

capital return to shareholders (including IBEX) - 9% of the market cap - along with anastasia.tikhonova@jpmorgan.com

J.P. Morgan Securities plc

a dividend payout increase to 40%, from the current 25%, in the longer term. We

expect a positive market reaction today to the results and capital allocation policy,

with consensus estimates for FY26 likely to be reset higher. We view the

investment story as on track: the turnaround is bearing fruit, FCF yield (5.4% 2026

JPMe) remains attractive, and we reiterate our OW rating.

• Noteworthy Areas: 1) In line with the trading update, Pepco’s Group LFL

printed at 3.6% (4.6% at Pepco banner) excluding FMCG, with 61 net new

stores opened, implying revenue growth of 5% y/y, slightly exceeding our

forecasts. This is below the FY26 guidance range owing to the expected

negative impact of the store conversions to exclude the FMCG range that will

feed in in 2H.