Rebranded with a BiG long-term plan

Marie Brizard Wine & Spirits 10 November 2015 QuickView

Marie Brizard Wine & Spirits

Rebranded with a BiG long-term plan

Food & beverages

QuickView

10 November 2015

Price

€19.97

Market cap

€529m

Share price graph

Share details

Code

MBWS

Listing

Euronext

Shares in issue

26.48m

Business description

Marie Brizard Wine & Spirits (formerly Belvedere SA) is a French producer and distributor of wine and spirits. Products include vodka (Sobieski), whisky (William Peel), Marie Brizard liqueur and Moncigale wine. The company’s largest markets are France, Poland and the US.

Bull

Attractive turnaround story, aided by continued disposal plans. Exit from administration expected soon.

BiG 2018 plan suggests steep earnings growth.

Large strategic shareholders (Diana Holding, La Martiniquaise and Castel) helping growth strategy.

Bear

Continues to operate under administration, which could impede management’s ability to make strategic decisions.

Possible regulatory intervention (eg excise duties) could negatively affect financials.

Continued competitive conditions in key Polish market (3.5% growth in Q2 vs 21% in Q1).

Analysts

Victoria Pease

+44 (0)20 3077 5700

Paul Hickman

+44 (0)20 3077 5704

Belvedere has been rebranded as Marie Brizard Wine & Spirits (MBWS), with an enhanced board, powerful shareholders and ambitious growth plans. Having risen 84% ytd, the shares now trade at a P/E of c 33x 2016e and c 17x 2017e. The investment case is focused on the long-term strategy, where EPS upgrades could be triggered by a new BiG 2.0 plan. A definitive exit from administration would also be an important step forward.

Exiting administration…

Following a breach of covenant in 2008, MBWS has undergone significant debt restructuring (€530m), resulting in heavy equity dilution in 2013. Although its difficulties with creditors now appear to be minimal (only €74m outstanding), MBWS continues to operate under administration. Exiting this status would clearly be beneficial and management hopes to achieve this in the coming months.

…with a BiG 2018 plan…

A new management team has been in place since 2014 and is currently implementing a four-year BiG 2018 target (Back in the Game by 2018). This includes growing the core business by 25-35% and bringing EBITDA margins to 12-15%. The group aims to achieve sales of €420-460m and EBITDA of €50-70m by 2018. The three key pillars of the plan are (1) asset rationalisation – disposing of unprofitable businesses and non-strategic assets; (2) optimisation of production, sourcing, distribution and sales; and (3) the development of flagship brands.

…turning into BiG 2.0 in December

Following its AGM in June, MBWS now benefits from an enhanced board structure, as well as a powerful industrial shareholder base (Diana Holding 17.3%, La Martiniquaise 6.8% and Castel Group 5.6%). These shareholders should be able to assist with top-line growth and provide numerous cost-cutting synergies, and management has indicated a potential uplift in BiG 2018 goals. We expect the upcoming BiG 2.0 plan to reflect these industrial opportunities.

Valuation: Focusing on 2018 and beyond

MBWS has left the Euronext Special Compartment and returned to Compartment B. Its shares have risen 84% ytd and currently trade at a P/E of c 33x 2016e. Clearly, the investment case focuses on management’s long-term 2018 goals, equivalent to a12.5x P/E. Further catalysts would be potential EPS upgrades with the new BiG 2.0 plan, as well as a definitive exit from administration.

Consensus estimates

Year end

Revenue
(€m)

PBT
(€m)

EPS
(€)

DPS
(€)

P/E
(x)

Yield
(%)

12/14

467

(18)

(0.69)

0.0

N/A

N/A

12/15e

478

4

0.10

0.0

N/A

N/A

12/16e

394

16

0.61

0.0

32.7

N/A

12/17e

419

36

1.17

0.0

17.1

N/A

Source: Bloomberg

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New Zealand

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)48 948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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