Publicação
Equity research - Jerónimo Martins SGPS SA
| Resumo: | The Following Equity Research report was written in accordance with the CFA Institute Equity Research recommended format and considers the public information available for Jerónimo Martins until the 8th of September 2021, any available information after this date was not considered. Jerónimo Martins is an international Portuguese based Group in the food retail business, primarily engaged in food distribution, with over 225 years of existence and a leading position in the Polish market. As a finance enthusiast, my motivations on choosing this company are related to JMT being an iconic Portuguese Group for many years, with a strong legacy and history, and due to my wish for valuing a PSI20 company. This report begins with a business description to present the company, analyse its segments and strategies, and provide a brief history. Moreover, the governance is described including an ESG section describing the company’s increasing given importance in this area. In addition, an Industry overview of the Food Retail & Distribution Industry, including Industry analysis, trends, economic outlooks, demand and supply and drivers of revenues and costs. Also, the competitive positioning was analysed with a SWOT analysis, PESTEL and porter´s 5 forces To perform a valuation on JMT, both absolute and relative valuation methods were considered. According to Free Cash Flow to the Firm (FCFF) method, the price target for 2020YE is €20.86 meaning an upside potential of 16% against the closing price on September 8, 2021. To support the valuation, other methods were used such as the Free Cash Flow to Equity (FCFE), Adjusted Present Value (APV), Dividend Discount Model (DDM) and Relative valuation with multiples from the selected peer group. Finally, the risks to the price target were assessed through a risk matrix, scenario analysis for changes in growth rates of revenues, sensitivity analysis to the Weighted Average Cost of Capital (WACC) and the terminal growth rate (g) and lastly, a Monte Carlo simulation using the Oracle Crystal Ball add-in. Considering a price target of €20.86 with an upside of 16%, the solid Poland business, future expansion projects and good outlook for Ara´s (JMT Colombian banner), the recommendation for JMT is BUY with medium risk. |
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| Autores principais: | Fonseca, Bernardo Marques Videira |
| Assunto: | Equity Research Valuation Mergers & Acquisitions Corporate Finance Discounted Cash-Flow Dividend Discount Model Relative Valuation Jerónimo Martins Food Retail & Distribution Supermarkets. Avaliação de Empresas Fusões e Aquisições Finanças Corporativas Retalho e Distribuição Alimentar Supermercados |
| Ano: | 2021 |
| País: | Portugal |
| Tipo de documento: | dissertação de mestrado |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório da Universidade de Lisboa |
| Resumo: | The Following Equity Research report was written in accordance with the CFA Institute Equity Research recommended format and considers the public information available for Jerónimo Martins until the 8th of September 2021, any available information after this date was not considered. Jerónimo Martins is an international Portuguese based Group in the food retail business, primarily engaged in food distribution, with over 225 years of existence and a leading position in the Polish market. As a finance enthusiast, my motivations on choosing this company are related to JMT being an iconic Portuguese Group for many years, with a strong legacy and history, and due to my wish for valuing a PSI20 company. This report begins with a business description to present the company, analyse its segments and strategies, and provide a brief history. Moreover, the governance is described including an ESG section describing the company’s increasing given importance in this area. In addition, an Industry overview of the Food Retail & Distribution Industry, including Industry analysis, trends, economic outlooks, demand and supply and drivers of revenues and costs. Also, the competitive positioning was analysed with a SWOT analysis, PESTEL and porter´s 5 forces To perform a valuation on JMT, both absolute and relative valuation methods were considered. According to Free Cash Flow to the Firm (FCFF) method, the price target for 2020YE is €20.86 meaning an upside potential of 16% against the closing price on September 8, 2021. To support the valuation, other methods were used such as the Free Cash Flow to Equity (FCFE), Adjusted Present Value (APV), Dividend Discount Model (DDM) and Relative valuation with multiples from the selected peer group. Finally, the risks to the price target were assessed through a risk matrix, scenario analysis for changes in growth rates of revenues, sensitivity analysis to the Weighted Average Cost of Capital (WACC) and the terminal growth rate (g) and lastly, a Monte Carlo simulation using the Oracle Crystal Ball add-in. Considering a price target of €20.86 with an upside of 16%, the solid Poland business, future expansion projects and good outlook for Ara´s (JMT Colombian banner), the recommendation for JMT is BUY with medium risk. |
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