First Read: Kingfisher PLC "Q1 LFL in line; Guide unchanged" (Neutral) Rajani

研报英文原文证据摘录

First Read: Kingfisher PLC "Q1 LFL in line; Guide unchanged" (Neutral) Rajani

Forecast returns

Forecast price appreciation 0.0%

Forecast dividend yield 4.2%

Forecast stock return 4.2%

Market return assumption 9.2%

Forecast excess return -5.0%

Company Description

Kingfisher Plc is an international home improvement company with over 1,400 stores and

over 80,000 employees. Kingfisher operates in Europe across 8 countries under retail banners

including B&Q (largest home improvement and garden centre in the UK), Castorama (offering

more than 50,000 home and garden products), Brico Depot (a low-cost format offering

customers the best quality-price ratio), Screwfix (largest multichannel supplier of trade tools)

and TradePoint (tools at trade price). The UK and Ireland are the largest markets followed by

France and Poland.

Valuation Method and Risk Statement

We value Kingfisher using a DCF which assumes a 9.5% WACC, 6.5% terminal EBIT margin

and a 1.0% terminal sales growth. We rate KGF Neutral as we think risk-reward outlook

currently remains balanced.

Upside risks include: 1) Stronger Market Recovery: Stronger than expected recovery in

Homewares market may occur on the back of underlying housing transactions. We see an

inflection in the housing market although given its only early signs we model revenue

prudently. If we get a stronger recovery, this may translate to better homewares market and

therefore better topline; 2) Capacity Exit: Capacity exit in UK Retail with players downsizing

their store estate and homeware assortment has led to some consolidation. While this has

stabilised recently, further capacity exit in key markets may drive incremental market share

gain; 3) Marketplace rollout: KGF’s Marketplace rollout is still fairly nascent with KGF adding