Tesco: The £1bn European Question

研报英文原文证据摘录

Tesco: The £1bn European Question

Deutsche Bank Group

Deutsche Numis Research

Rating Company Date

Buy Tesco 9 July 2026

Company Update

Europe

United Kingdom

Reuters Bloomberg Exchange Ticker Price at 8 Jul 2026 (GBP) 472.20

TSCO.L TSCO LN LSE TSCO

Price Target (GBP) 525.00

Retail

Retail - Food ADR ISIN 52-week range (GBP) 501.20401.10-

TSCDY US8815753020

The £1bn European Question

Valuation & Risks

Benjamin Yokyong-Zoega

DB View Research Analyst

The FT reported yesterday that Tesco is exploring a sale of its Central Europe +44-20-754-12338

operations. While unconfirmed, we do not view this as surprising given the

Adam Cochrane

challenges in Hungary and the group's progressive exit from international markets. Research Analyst

Central Europe is being managed for profit recovery, with cash reinvested in the UK. +44-20-754-17812

A sale would simplify the business and improve margins, while reducing regulatory

Do-Hyun Yoo

risks. This note outlines the Central Europe business, regional market shares,

Research Associate

strategic options, potential buyers and valuation. Our Buy thesis is unchanged with

+44-20-754-19487

Tesco a top pick in UK Retail. The stock trades on 16x Cal-27e PE and 6% FCF yield.

Shwetha Ramachandran

Cash generative but margin dilutive

Central Europe accounts for 3.6% of group EBIT in FY26 with its 2.5% margin below

the group at 4.3%. Unlike the UK, Tesco does not enjoy leading scale in these Price/price relative

markets. There is high discounter competition in the region but, more importantly,

regulatory impacts, such as margin caps in Hungary, have weighed on profitability.

Strategic options

Disposal: Tesco could either seek a single buyer or separate sales in each market. 200 2024 2025 2026