Lower visibility ahead
TARGET CHANGE
CHANGE IN EPS
2022 : € (1.11) vs 1.00 ns
2023 : € (0.59) vs 1.12 ns

We have trimmed our earnings expectations for FY22 onwards on the back of the disappointing FY21 results and an uncertain outlook for the year ahead. During Q1 22, the group sold the majority of its shares in Koro. Koro had been the fastest-growing asset, and the group had combined Koro with other food brands in a new wholly-owned subsidiary – Food Chain GmbH previously. Although Koro's sales enabled the group to report a positive EBITDA in Q1 22, we believe that the separation from Koro will significantly slow the group’s growth pace. The inflationary pressure in the western world is resulting in a challenging trading environment and uncertain consumer behaviour this year, which will inevitably impact the group’s business.


CHANGE IN NAV
€ 28.5 vs 58.8 -51.6%

The sale of the shares in Koro has significantly reduced the visibility on the group’s food business in the coming years despite the cash gain. The lowered earnings expectations and multiple used for the food division (1.5x EV/Sales vs.3.0x EV/Sales) have negatively weighed on our NAV.


CHANGE IN DCF
€ 17.5 vs 66.3 -73.6%

The lowered earnings expectations for the coming years have resulted in lower short-term cash flow generation. However, the social-commerce market remains very promising. S-commerce generated sales of $492bn globally in 2021 and the market is expected to reach $1,200bn by 2025 (+25% CAGR 2021-2025). As the European S-commerce pioneer, the social chain is best placed to benefit from the booming s-commerce market. Although the unfavourable macro environment and the sale of Koro will result in some short-term business turbulence, we remain positive on the stock for the long term.