Associated British Foods (AO) | Buy | ABF trading statement seen reiterating guidance, Primark focus

研报英文原文证据摘录

Associated British Foods (AO) | Buy | ABF trading statement seen reiterating guidance, Primark focus

Associated British Foods Buy | Target Price: 2100p

Company description Management

ABF is an international food and clothing group which will split into its George Weston, CEO

component businesses. Primark, a low-cost fast fashion clothing retailer, Joana Edwards, CFO

accounts for over half of the group's earnings. In food, its grocery division owns Eoin Tonge, Primark CEO

brands that include Twinings, Ovaltine, Kingsmill, Ryvita, and Patak's. It has Key shareholders

smaller sugar, ingredients, and agricultural input divisions. It is majority- Free float 39.70%

controlled by the Weston family. George Weston, grandson of the founder, is CEO. Wittington (Garfield Weston Foundation) 58.10%

Investment case Valuation methodology

The company will split into its constituent retail and food We use a mixture of a sum-of-the-parts, given the company's

businesses in 2027 through a dividend demerger. We see the diversified portfolio, a target multiple, and a DCF.

move creating value and a rerating of both businesses above Our DCF assumes 3% medium-term growth, 2% terminal

existing levels. growth, and a 10% WACC.

Primark's reboot strategy has led to improved like-for-like sales Risks to our rating

growth in the UK and we see a similar development in Europe Consumer environment deteriorates, hurting Primark business.

although we note the uncertain consumer environment. Growing consumer concern about environmental issues

We believe the company's sugar business is at bottom. surrounding fast fashion.

Catalysts No sugar recovery.

ABF trading statement due 2 July with update on Primark.

Recovery in global sugar prices.

Break up is expected sometime July-October 2027.

Key data charts