Equity Report 12.08.2021 – KINGFISHER PLC (KGF)

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KINGFISHER PLC SURF ON A NEW “DO IT YOURSELF” WAVE IN EUROPE

 

Based in London, Kingfisher plc operates as a  supplier of home improvement products and services in the United Kingdom, Ireland, France, Poland and internationally. KGF owns over 1 386 stores in nine countries all across Europe under the B&Q, Screwfix, Castorama, Brico Depot and Koctas brands

KGF revenues were up by 6.8% in FY21 to £12.3 Bn, strong performance of all its retail brands: such as the UK & Ireland brands (B&Q and Screwfix) scored +12.3% growth y/y as well as in France (Castorama and Brico Dépôt) +5.5% growth y/y.

Rising demand on DIY items were the main drivers as consumers were, for the majority of them were confined and spent more time improving their home

 

 

 

 

 

 

Overall, KGF, had to deal with exceptional challenges. The home improvement and DIY company has seen the slowing down of its business (in both Q1-2021 and beginning of Q2-21), as the covid-19 pandemic limited the interactions between people with quarantine and self-distancing measures, shutting down temporarily most of its retail outlets in Europe (especially in France) and forcing KGF to initiate further investments online via home deliveries and Click & Collect services, which strengthened its business over the Q3-21 and Q4-21.

KGF continued to make significant growth in key market achieved in Q1-2022, £3.4 Bn in net sales, up 60% y/y (vs £2.1 Bn prior year), highlighted by strong demand from existing and new customers across all its retail brands. In addition, strong e-commerce sales growth all over Europe.

 

The change in cash balance is getting back on track since 2020. Operating activities remained quite strong and were rising, inventories and receivables from clients, are all converting much faster into cash compared to previous years (125 days and 9 days, on average, respectively). Also, investments remained constant : capital expenditures in properties (opening new stores) and  into its online platform (e-commerce) to capitalize on future earnings.

KGF does well in returning capital to its shareholders. First, by paying them constant dividends (£250 M each year on average), which represents a 3.5% in dividend yield. Second, with a share buyback program (that ended for the 2019 period): and as a result, KGF, spent in total £600 M since 2016, with the plan to return an addtional £20 M to its shareholders. All funded by KGF strong operational capabilitites.

 

YTD, the stock gain 32.13%. The share price (11/08/2021) closed at £367.2 per share.

Share expectation : £410

 

 

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