Zabka Group (ZAB.WA): Downgrade to Sell on Demanding Valuation

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Zabka Group (ZAB.WA): Downgrade to Sell on Demanding Valuation

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23 Jul 2026 00:00:00 ET │ 16 pages

Zabka Group (ZAB.WA)

Downgrade to Sell on Demanding Valuation

CITI'S TAKE

We are downgrading our rating on Zabka to Sell from Neutral, primarily due

to demanding valuation that we believe has decoupled from the stock’s

underlying fundamentals and its comparable peer group. The stock's Sell ↓ from Neutral

impressive performance, +44% YTD and +56% over the last twelve months, Price (22 Jul 26 17:00) Zl33.46

stands in contrast to key peers Dino and JMT, which have seen share price

Target price Zl25.00declines of 28%/42% and 17%/25% respectively over the same periods. This

has pushed Zabka's valuation to a consensus 2026/27E P/E of ~27/22x, a Expected share price return -25.3%

significant premium to the peer group average of ~16/14x. While we Expected dividend yield 1.6%

acknowledge Zabka's superior growth prospects warrant a premium, the

Expected total return -23.6%current valuation gap looks excessive in our view.

Market Cap Zl33,560M

Recent catalyst — The primary catalyst for this recent re-rating has been the news US$8,841M

(16 July) that Seven & i Holdings is in negotiations to acquire a stake. While we see

this as a positive development as it could potentially remove the overhang risk

associated with the company's current private equity ownership, we believe the

market reaction is overdone and the potential benefits are now more than fully

priced in. We do not anticipate this potential partnership to materially accelerate Price Performance

Zabka's growth momentum, which has already been outpacing that of Seven & i in (RIC: ZAB.WA, BB: ZAB PW)

recent years. Furthermore, given Seven & i’s leverage (2.2x, 2025 Net debt/EBITDA),