First Read: Meal vouchers (EDEN / PLX) "Prosus' iFood voucher business..."

Research evidence excerpt

First Read: Meal vouchers (EDEN / PLX) "Prosus' iFood voucher business..."

Valuation Method and Risk Statement

Edenred:

Risks to our price target and rating include: 1) regulation potential across its key meal benefits

sub segment - which is the most material portion of revenue, particularly in France and Brazil,

its largest markets. Regulation has the potential to drive pricing down (on the merchant side,

whilst nothing has been discussed on the corporate side); 2) Fuel prices, which impact the

F&M business, and account for ~10% of revenues, due to spending on cards at fuel stations -

fuel is a volatile asset so this can lead to moves in the segment revenues; 3) exposure to

emerging markets, particularly Brazil, which has a volatile currency at times, as well as political

change; 4) A change in the value and the way open loop / closed loop card systems interact

within employee benefits and fuel cards. Valuation method utilises a multiples approach on

PE, cross checked with EV/EBITDA, and looked at in the context of both overall and operating

EBITDA. We value Edenred also using a Multiple to growth (MTG) approach which enables us

to normalise growth rates for varying degrees of growth and maturity in the comparisons.

MTG could be less valuable for Edenred (in PE) when interest rates are elevated (downward

trajectory) as downward pressure can skew MTG upward. However the metric is useful on

operating EBITDA, which we employ. Further we employ an illustrative DCF as a cross check.

Pluxee:

whilst nothing has been discussed on the corporate side); 2) exposure to emerging markets,

particularly Brazil, which has a volatile currency at times, as well as political change; 3) A

change in the value and the way open loop / closed loop card systems interact within