Pepco Group NV "Life After Dealz; PT up to PLN 44" (Buy) Potyra

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Pepco Group NV "Life After Dealz; PT up to PLN 44" (Buy) Potyra

Pepco Group NV UBS Research

solid delivery continues; pt up to pln 44

Forecast update: Deconsolidation of Dealz drives 2-

8% upgrades to 26-28E adj. EPS

We have revised our model upward following the 3Q26 results, including both the

higher LFL sales trajectory and the deconsolidation of Dealz. We make small upgrades to

our LFL sales assumptions (FY26 increasing from 1.5% to 2.5% and FY27 from 2.9% to

3.0%) following strong YTD delivery. At the same time, the deconsolidation of Dealz

results in our reported revenue estimates moving down by 3%-6%. Our FY26

underlying EBITDA decreases by 1%, while remaining stable for FY27-28, once again

driven by the deconsolidation of Dealz. Given the dilutive impact of Dealz on the bottom

line, our adj. net profit and adj. EPS estimates increase by 2% for FY26, 8% for FY27,

and 7% for FY28.

Figure 1: Pepco forecast update

Pep co forec ast up date

Source: UBS estimates

3Q26 trading update commentary

We view Pepco’s 3Q26 results (trading update) as another positive indicator of solid

execution and stronger consumer engagement across both the newer Western Europe

markets (+15% ex FMCG LFLs) and the more established CEE markets (+3.6% LFL).

Notably, robust revenue growth has been delivered alongside gross margin expansion,

which is up 290bps YTD. Management remains confident in the sustainability of LFLs

and margins, and continues to guide for profitable organic growth and healthy free cash

flow generation of approximately €300m.

Pepco raised its FY26 guidance (see Fig. 2), primarily reflecting the deconsolidation of

Dealz, which had been dilutive to group earnings and free cash flow. Our estimates are

broadly aligned with the revised guidance.