Updating Estimates, Investor Feedback + 10 Questions for Management

Research evidence excerpt

Updating Estimates, Investor Feedback + 10 Questions for Management

industry. That said, even bulls acknowledged that

EV/EBIT** 5.4 7.6 6.5 5.5

the shares remain highly sentiment-driven, limiting conviction. Bears generally view DPS (€) 1.33 1.38 1.50 1.73

Div yld (%) 7.0 5.2 5.7 6.6

the industry as structurally challenged, arguing that digitalisation increases the FCF yld ratio (%)** 29.2 7.1 13.3 14.6

likelihood of additional markets moving towards interoperability, compressing Net debt (€mn)* 1,241 1,250 845 304

Net debt/EBITDA** 0.9 1.0 0.6 0.2

Edenred’s take rate. They also point to a broader shift towards faster settlement RNOA (%)** 103.2 297.7 293.3(1,712.4)

cycles, which could structurally reduce float income. Others believe leverage is too ROE (%)** NM NM NM NM

high once float-related liabilities are included, limiting capital-allocation optionality Unless otherwise noted, all metrics are based on Morgan Stanley ModelWare

framework

from here. Regarding the potential private equity interest flagged by the company, * = GAAP or approximated based on GAAP

** = Based on consensus methodology

there was limited surprise that Edenred attracted attention at prior share-price e = Morgan Stanley Research estimates

levels. However, in our discussions, the bears argued that any valuation floor now

sits well below the current price following the rally over the past six weeks, while

some questioned whether the group would have sufficient capacity to support the

additional leverage required for a hypothetical transaction to work. The recent

results were received positively overall, particularly given that the regulatory

headwind was less severe than feared. That said, management commentary on the

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