Associated British Foods Share Discussion Threads

[philanderer] 19/12/2017 12:19

RBC downgrade note:

RBC warns AB Foods that even Primark isn’t immune to tough retail environment

19 Dec 2017

The Canadian bank thinks ABF’s Primark business will struggle to grow like-for-like sales over the next year or two

Associated British Food PLC’s (LON:ABF) Primark stores have managed to grow sales in recent months and years despite a weakening UK consumer environment.

That resilience is what makes it “one of the stronger apparel retailers” according to Royal Bank of Canada.

The mid-level bank does have concerns about how long those sales can continue to rise though, with the lack of any kind of online store and a hard-to-crack US market being its main bugbears.

“We think [Primark’s] high volume densities may be becoming a constraint to LFL sales growth, it lacks a transactional online offer and we think it will take a long time for it to reach critical mass in the US, where it lacks brand recognition,” wrote analyst Richard Chamberlain.

As a result, the analyst has lowered his underlying forecasts for the value clothes retailer by 3%, owing to weaker like-for-like sales assumptions which he now expects to be flat next year (versus previous estimate of +1.5%).

Chamberlain has also trimmed its underlying earnings forecasts for ABF’s sugar division on the back of lower prices of the sweet stuff.

All in all, he has cut his rating to ‘sector perform’ from ‘outperform217;, while his price target has fallen to £31 from £35.

proactiveinvestors.co.uk

[philanderer] 19/12/2017 09:30

Downgraded by RBC today to 'sector perform' ..target cut from 3500p to 3100p

[suetballs] 19/12/2017 08:58

Chart looking pretty grim. Looking to fall 20% from its high.
Suet

[philanderer] 13/12/2017 18:20

xd tomorrow morning for the 29.65p dividend

[tlobs2] 12/12/2017 13:56

I took the bait and doubled up this morning :-)

[tlobs2] 10/12/2017 20:30

Very positive vibes coming from the announcements last Friday.

I have high hopes of hitting £35 in the next six months if all else goes well :-)

[philanderer] 08/12/2017 19:29

Associated British Foods plc (LON:ABF) chairman, Charles Sinclair, said the group expects an increase in retail profit for the year after opening more Primark stores.

In his annual general meeting statement, Sinclair said Primark's expansion will continue after opening five new stores and relocating two others this fiscal year to bring the total selling space to 14.2 million sq ft.

proactiveinvestors.co.uk

[philanderer] 08/12/2017 12:41

Market report: Retailers prove a mixed bag as City mulls tips on Christmas winners


Christmas is still more than two weeks away, but that’s not stopped the City from betting on this year’s crackers and turkeys in the retail sector.

Deutsche Bank’s 29-page analysis of European retailers predicts another mixed bag of Christmas trading updates, with firms at the value end likely to have done the best.

The bank’s top picks remain Primark owner Associated British Foods, B&M and Boohoo, with clothing retailers — including Marks & Spencer and Next — under pressure after a difficult autumn.

[philanderer] 08/12/2017 08:58

Primark and Sports Direct named for underpaying staff

[philanderer] 07/12/2017 14:34

Shareprice now -15% in a month :-S

[philanderer] 06/12/2017 16:00

Bonkers in Primark uxbridge this morning :-)

[philanderer] 05/12/2017 14:02

Primark and throng of retailers to open at Westfield London's £600m extension

[philanderer] 05/12/2017 09:27

Thanks sb , just heard it .

[suetballs] 05/12/2017 08:01

Trouble at Vivergo Fuels.
Suet

[philanderer] 04/12/2017 18:40

Yes much better :-)

Risers

Carnival (CCL) 4,897.00p 2.79%
Ashtead Group (AHT) 1,957.00p 2.78%
Sky (SKY) 955.50p 2.74%
Barclays (BARC) 194.30p 2.59%
Associated British Foods (ABF) 2,943.50p 2.56%
TUI AG Reg Shs (DI) (TUI) 1,387.00p 2.29%
Royal Bank of Scotland Group (RBS) 276.00p 2.18%
CRH (CRH) 2,599.00p 2.04%
Land Securities Group (LAND) 938.50p 2.01%
British Land Company (BLND) 640.00p 1.67%

[tlobs2] 04/12/2017 14:37

Nice positive bounce back up. I'd be happy for it to level out and pause at 3200p for a few weeks ;-)

[suetballs] 02/12/2017 07:46

For me the US expansion was vital for continued share price traction. So the recent news is disappointing and I am not surprised the share price has taken a severe tumble. Afraid I can't see much upside from here. Hope I am proved wrong.
Suet

[philanderer] 01/12/2017 09:35

So back to july's 2850p then by the look of it.

Bewildering :-S

[philanderer] 28/11/2017 13:29

Primark's US expansion in doubt as Morgan Stanley downgrades AB Foods

Primark's management regards its US pull-back as "fine-tuning" and remains committed to the US market, but MS now assumes no further expansion in the US in its base case

Primark could become the latest successful UK retailer to come a cropper in the US, opined US investment bank heavyweight, Morgan Stanley.

The bank is stripping out further Primark US expansion from its base case model on Associated British Foods plc (LON:ABF), the owner of Primark.

As a result, the stock has been downgraded from ‘overweight217; to ‘equal weight’, with an increased price target of 3,100p, some 55p above the current AB Foods share price and 300p higher than Morgan Stanley’s previous target price.

Morgan Stanley said it is struggling to identify positive catalysts for the share price on a 12-18 month horizon,

“We have not given up on Primark eventually succeeding in the US, but now believe that it will be at least another 12-18 months before any further expansion is announced, and with Primark currently delivering c7% lfl [like-for-like] sales in the UK, and sales densities in Europe already extraordinarily high, we find it hard to see where incremental good news will come from in the coming months,” Morgan Stanley (MS) said.

On the plus side, MS is increasing its sum-of-the-parts valuation of the group’s food division, which includes Twinings Ovaltine and Jordan Ryvita from around £3.7bn to roughly £5;.6bn.

Nevertheless, Primark remains the key to AB Foods in MS’s view, and the retailer has not signed any new leases in the US for around 18 months and has announced plans to reduce the size of three of its eight stores in the US.


proactiveinvestors.co.uk

[philanderer] 28/11/2017 10:51

Downgraded by Morgan Stanley to 'equal weight' .. tp raised from 2800p to 3100p

[philanderer] 27/11/2017 14:49

Primark remains growth engine for ABF, says Liberum

Liberum has maintained its ‘buy’ rating on ABF and raised its target price to 3,500p from 3,150p

Primark owner Associated British Foods (LON:ABF) shares offer compelling exposure to secular growth trends in retail over the next 10 years, analysts at Liberum said.

Liberum maintained its ‘buy’ rating on the stock and raised its target price to 3,500p from 3,150p, citing “strong” fiscal year 2017 trading and a “robust” profit outlook for 2018.

“In our view, Primark remains well-positioned to take market share and drive double digit sales growth, backed by visible new annual space additions of 1.2m+ sqf, underpinned by Continental (Europe) roll-out,” Liberum said.

In the year to 16 September 2017, adjusted operating profit rose 22% to £1.3bn and revenue increased 15% to £15.4bn, driven by growth in Primark.

The company said selling space expansion at Primark would continue, mostly in the UK, and it predicts an increase in retail profit in the current year.

Liberum said Primark remains the “growth engine”. “High sales densities and solid like-for-like sales underpin double-digit revenue growth for Primark.”

However, the broker cut its earnings per share (EPS) estimates for fiscal years 2018 to 2019 by 6%, reflecting lower sugar profits as a result of a significant increase in volumes in the EU following the abolition of production quotas.

It forecasts sugar profits of £177mln in 2018, down 20% on the previous year. But ABF has taken action ahead of the production quotas by cutting costs, restructuring assets and locking in lower sugar beet prices on multi-year contracts.

“We ultimately expect ABF will be a net winner as the industry further consolidates,” Liberum said.

Liberum expects 5% growth in group pre-tax profits in 2018, driven by all divisions except sugar.

ABF is projected to deliver a 9% adjusted EPS compound annual growth rate over fiscal years 2017 to 2022, excluding mergers and acquisitions. Growth could improve if the roll-out of Primark stores quickens, Liberum said.

The broker also thinks a “conservative balance sheet” offers further opportunity for strategic investments in store parcels for Primark and selected grocery bolt-on deals.

ABF cut last year’s net debt to end 2017 with net cash balance of £673mln.

Its margins also recovered in 2017 on strong trading at Primark and a rebound in sugar prices. Margins are expected to fall in 2018 as EU sugar prices drop and the company gets rid of maturing stores, according to Liberum.

Liberum sees margins rising by 80 basis points to 9.7% by 2022, boosted by the continued roll-out of Primark stores, demand for sugar in South Africa, growth in grocery and cost reductions in the food ingredients arm.


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