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1. Company Snapshot

1.a. Company Description

Eurocash S.A. distributes fast moving consumer goods (FMCG) in Poland.The company operates through three segments: Wholesale, Retail, and Projects segments.Its FMCG products include food products, soft drinks, alcoholic beverages, tobacco products, and household chemicals and cosmetics.


The company markets its products to traditional retail stores, including small supermarkets, grocery stores, and specialized grocery stores; and kiosks, retail outlets, and convenience stores at petrol stations, restaurants, hotels, cafeterias, and catering outlets.As of December 31, 2021, it operated a network of 179 Cash & Carry warehouses; 1,569 Delikatesy Centrum network supermarkets; 417 Inmedio press salons; 9,149 abc network grocery stores; and 5,570 franchise and partner stores of Eurocash distribution.Eurocash S.A. is based in Komorniki, Poland.

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1.b. Last Insights on EUR

Eurocash S.A.'s recent performance was negatively impacted by a decline in the Polish stock market, with the WIG30 index falling 0.06% and 0.58% over the past two weeks. The losses were primarily driven by sector-specific downturns in Oil&Gas, Basic Materials, and Chemicals. Additionally, the company's exposure to the energy and materials sectors may have contributed to the negative sentiment.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Poland stocks lower at close of trade; WIG30 down 0.58%

Aug -28

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Poland stocks lower at close of trade; WIG30 down 0.06%

Aug -22

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ECB Maintains High Interest Rates to Combat Inflation Amid Economic Slowdown

Sep -25

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ECB Maintains High Borrowing Costs to Control Inflation Amid Economic Difficulties

Sep -25

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ECB's Villeroy advocates patience in monetary policy amid rising oil prices

Sep -25

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Inflation slowdown provides relief to central banks in US and Eurozone

Sep -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.41%)

6. Segments

Wholesale

Expected Growth: 3%

Eurocash S.A.'s 3% wholesale growth is driven by increasing demand for convenience and private label products, expansion into new markets, and strategic partnerships with suppliers. Additionally, the company's focus on digitalization, efficient logistics, and cost optimization have improved operational efficiency, contributing to the growth.

Retail

Expected Growth: 2%

Eurocash S.A.'s retail segment growth is driven by increasing demand for convenience and proximity shopping, expansion into smaller towns and cities, and strategic partnerships with suppliers to improve logistics and reduce costs. Additionally, investments in digitalization and e-commerce capabilities are enhancing customer experience and driving sales growth.

Eliminations

Expected Growth: 0%

No growth in eliminations from Eurocash S.A. is attributed to stagnant market conditions, lack of innovation, and intense competition in the wholesale and retail sectors, leading to minimal synergies and no need for intercompany eliminations.

Projects

Expected Growth: 4%

Eurocash S.A.'s 4% growth is driven by increasing demand for modern retail formats, expansion into new markets, and strategic partnerships. Additionally, the company's focus on private label products, efficient logistics, and cost optimization contribute to its growth. Furthermore, the rising popularity of convenience stores and the growing importance of e-commerce also support Eurocash's growth momentum.

Other

Expected Growth: 1%

Eurocash S.A.'s 'Other' segment growth is driven by increasing demand for convenience services, expansion of its network of cash machines, and growing popularity of its financial services, such as money transfers and bill payments, among Poland's unbanked population.

7. Detailed Products

Cash and Carry Wholesale

Eurocash S.A. operates a cash and carry wholesale business, offering a wide range of products to its customers, including food, beverages, and other fast-moving consumer goods.

Franchise Services

Eurocash S.A. provides franchise services to independent retailers, offering a range of support services, including logistics, marketing, and operational support.

Retail Services

Eurocash S.A. operates a retail business, offering a range of products to consumers through its own retail stores and online platforms.

Logistics and Distribution

Eurocash S.A. provides logistics and distribution services to its customers, including transportation, warehousing, and inventory management.

Private Label Products

Eurocash S.A. offers a range of private label products, including food, beverages, and household items, under its own brands.

8. Eurocash S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Eurocash S.A. operates in a market with moderate threat of substitutes, as customers have some alternatives to traditional retail stores, such as online shopping platforms and discount stores.

Bargaining Power Of Customers

Eurocash S.A. has a large customer base, which reduces the bargaining power of individual customers, and the company's diversified product offerings also limit the bargaining power of customers.

Bargaining Power Of Suppliers

Eurocash S.A. has a moderate bargaining power of suppliers, as it sources products from a large number of suppliers, but some suppliers may have significant bargaining power due to their large market share.

Threat Of New Entrants

The threat of new entrants in the retail market is low, as it requires significant investment and resources to establish a new retail business, and Eurocash S.A. has a strong market position.

Intensity Of Rivalry

The retail market in Poland is highly competitive, with many players competing for market share, which increases the intensity of rivalry and puts pressure on Eurocash S.A. to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 56.82%
Debt Cost 7.72%
Equity Weight 43.18%
Equity Cost 7.72%
WACC 7.72%
Leverage 131.58%

11. Quality Control: Eurocash S.A. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 7.6

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Momentum: 7.0

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A-Score: 5.9/10

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A-Score: 5.4/10

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A-Score: 5.1/10

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Growth: 4.0

Quality: 3.3

Yield: 5.0

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Eurocash

A-Score: 4.0/10

Value: 9.0

Growth: 5.2

Quality: 2.0

Yield: 1.2

Momentum: 2.0

Volatility: 4.7

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A-Score: 2.1/10

Value: 8.9

Growth: 1.7

Quality: 1.8

Yield: 0.0

Momentum: 0.0

Volatility: 0.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

7.12$

Current Price

7.12$

Potential

-0.00%

Expected Cash-Flows