Last close As at 05/08/2026
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Market capitalisation
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Research: Consumer
The group has continued to grow strongly in Q3, albeit at a slightly reduced pace compared to H1. Revenues for the first nine months (9M) were significantly higher than last year due to higher volumes as consumers were at home, particularly during Q2. Margins expanded owing to higher operating leverage and improved industrial efficiency as the 2018 investment plan is almost complete and starting to bear fruit. We continue to see upside to our forecasts, as La Doria benefits from the prolonged pandemic-related shift in consumption.
Written by
La Doria |
Pandemic windfall |
9M20 results |
Food & beverages |
23 November 2020 |
Share price performance
Business description
Next events
Analysts
La Doria is a research client of Edison Investment Research Limited |
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The group has continued to grow strongly in Q3, albeit at a slightly reduced pace compared to H1. Revenues for the first nine months (9M) were significantly higher than last year due to higher volumes as consumers were at home, particularly during Q2. Margins expanded owing to higher operating leverage and improved industrial efficiency as the 2018 investment plan is almost complete and starting to bear fruit. We continue to see upside to our forecasts, as La Doria benefits from the prolonged pandemic-related shift in consumption.
Year end |
Revenue (€m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/18 |
687.9 |
33.1 |
88.2 |
18.0 |
14.4 |
1.4 |
12/19 |
717.7 |
32.7 |
64.0 |
18.0 |
19.8 |
1.4 |
12/20e |
839.7 |
53.8 |
133.5 |
18.0 |
9.5 |
1.4 |
12/21e |
814.5 |
52.0 |
129.2 |
19.0 |
9.8 |
1.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
9M20 results demonstrate continued strength
Group revenues for 9M20 were €633.4m, up 18.9% on 9M19, while Q3 revenues were €191.6m (+9.9% y-o-y). The 9M EBITDA was €56.5m (+40.5% on 9M19), with margins up 130bp. Q3 EBITDA was €22.4m (+31.8%), with margins up 200bp. Net debt was €105.2m, versus €89m at end H120. All segments and geographies contributed to the excellent growth, which was driven by increased demand owing to greater at-home consumption and winning new contracts with strategic clients.
Raising forecasts
The outlook is positive as renewed temporary restrictions on the horeca (hotel, restaurant and catering) segment are once again stimulating at-home consumption, so Q4 will be another strong quarter for the company. Although the economic environment is uncertain, consumption is likely to return to more normal levels once restrictions are lifted. This should lead to lower volumes in FY21, although pricing in the all-important annual negotiations has been strong and we expect group revenues to be only c 3% lower. While La Doria’s benefit from operational gearing is likely to reduce as consumption normalises, its cost-cutting efforts via the investment plan – in particular those at LDH – will continue to benefit the bottom line. We raise our FY20 forecasts to reflect the strong Q3 and expectations of a similar performance in Q4. Our forecasts for FY21 and beyond also increase as we believe the pandemic has caused a structural increase in at-home consumption.
Valuation: Fair value of €17.00 per share
Our DCF model indicates a fair value of €17.00 per share (previously €15.50), or c 20% upside from current levels. On our estimates, La Doria trades on a P/E of 9.8x FY21e, a c 30% discount to its private-label peer group. On EV/EBITDA it trades at 7.5x FY21e, broadly in line with its peers. We believe La Doria remains an attractive proposition, given its strong market position in the private label segment. Management remains committed to improving both the product mix and the stability of the business, while maintaining its competitive edge.
9M20 results and forecasts
Consolidated revenues for 9M20 were €633.4m, up 19% on the prior year. As expected, the growth in Q3 decelerated to +9.9% with revenues at €192m. The 9M EBITDA was €56.5m, up 40.5% vs the prior year, with margins up 130bp to 8.9%. Q3 EBITDA was €22.4m (+31.8%), with margins up 200bp to 11.7%. Group EBIT was €43.5m, versus €27m in 9M19, resulting in EBIT margin increasing 180bp to 6.9%. Net debt was €105.2m compared to €135m at end 9M19 and €89m at the end of H120.
Both the base business and the trading activities of the LDH subsidiary (which operates in the UK) reported excellent growth, with the latter witnessing 26% revenue growth during 9M20. This was once again mainly volume driven.
Although La Doria has not updated its business plan, we raise our forecasts to reflect the continued good performance through Q3. Demand is again elevated as the horeca channel has closed in many markets. The seasonal tomato campaign resulted in the overall fresh tomato crop volume in southern Italy being in line with the 2019 campaign. This was below market expectations, and hence caused an increase in raw material costs. However, coupled with low inventory levels and higher demand levels owing to the pandemic, this resulted in a more favourable commercial landscape, so we believe price increases are likely and this should benefit FY21 profitability in the segment. La Doria’s other segments should also benefit from sustained demand in FY21 owing to the pandemic, and in the longer term due to the change in consumer behaviour (eg increased at-home consumption caused by more flexible working arrangements and more hours worked from home).
We forecast the usual seasonality to La Doria’s cash flows for FY20 and expect net debt to increase to €130.3m by end FY20 (from €105.2m at end 9M20 and below the end 2019 level of €148.8m). From FY21, we expect capital expenditure to fall as La Doria’s four-year investment programme comes to an end and it starts to reap the rewards of its investments. We forecast strongly positive cash flows to contribute to net debt more than halving by the end of FY23 (to our forecast €43m).
Our forecasts are shown in Exhibit 1. As a reminder, we do not assume any further significant lockdowns in La Doria’s main markets.
Exhibit 1: New versus old forecasts
€m |
2020e |
2021e |
2022e |
||||||
Old |
New |
% chg |
Old |
New |
% chg |
Old |
New |
% chg |
|
Revenue |
803.8 |
839.7 |
4.5% |
779.7 |
814.5 |
4.5% |
795.2 |
822.6 |
3.4% |
EBITDA |
65.1 |
72.3 |
10.9% |
65.5 |
72.5 |
10.7% |
67.6 |
74.1 |
9.5% |
EBIT |
48.1 |
55.3 |
14.8% |
46.5 |
53.5 |
15.0% |
47.6 |
54.1 |
13.5% |
PBT |
46.6 |
53.8 |
15.2% |
45.0 |
52.0 |
15.5% |
46.1 |
52.6 |
14.0% |
Net profit |
35.9 |
41.4 |
15.2% |
34.7 |
40.1 |
15.5% |
35.3 |
40.2 |
14.0% |
Net debt |
147.4 |
130.3 |
-11.7% |
115.6 |
101.0 |
-12.6% |
84.0 |
74.1 |
-11.8% |
EBITDA margin |
8.1% |
8.6% |
0.5% |
8.4% |
8.9% |
0.5% |
8.5% |
9.0% |
0.5% |
EBIT margin |
6.0% |
6.6% |
0.6% |
6.0% |
6.6% |
0.6% |
6.0% |
6.6% |
0.6% |
Source: Edison Investment Research
Valuation
We illustrate La Doria’s valuation versus its peers in Exhibit 2 below. On our 2021 estimates, La Doria trades at a c 30% discount on a P/E basis, which we believe is unwarranted given the company’s balance sheet is conservatively managed. On an EV/EBITDA measure, La Doria trades broadly in line with the peer group. As a result of its strong performance during the COVID-19 pandemic, La Doria has outperformed the peer group and its discount has narrowed, although we believe the discount could narrow further as the company continues to benefit from the shift in consumer preference to eating at home and reaps the benefits of its four-year investment programme.
Exhibit 2: Benchmark valuation of La Doria relative to peers
Market cap |
P/E (x) |
EV/EBITDA (x) |
Dividend yield (%) |
||||
(m) |
2020e |
2021e |
2020e |
2021e |
2020e |
2021e |
|
Greencore |
£513.8 |
27.8 |
12.1 |
10.3 |
7.8 |
0.4 |
2.8 |
Ebro Foods |
€ 2,856.8 |
14.6 |
15.8 |
8.7 |
9.2 |
3.3 |
3.6 |
Bonduelle |
€ 644.3 |
10.7 |
9.4 |
7.1 |
6.5 |
2.4 |
2.3 |
Valsoia |
€ 143.9 |
17.3 |
18.2 |
9.3 |
9.7 |
2.8 |
2.8 |
Centrale del Latte d'Italia |
€ 33.4 |
13.3 |
12.6 |
8.7 |
8.5 |
0.0 |
0.0 |
Newlat |
€ 219.3 |
14.4 |
14.4 |
4.8 |
4.9 |
0.0 |
0.0 |
Peer group average* |
16.3 |
13.8 |
8.1 |
7.8 |
1.5 |
1.9 |
|
La Doria |
€ 394.3 |
9.5 |
9.8 |
7.5 |
7.5 |
1.4 |
1.5 |
Premium/(discount) to peer group |
(41.7%) |
(28.5%) |
(7.5%) |
(3.5%) |
(4.9%) |
(22.7%) |
|
Source: Edison Investment Research estimates, Refinitiv. Note: Prices at 20 November 2020.
Our DCF is based on our (unchanged) assumptions of a 1.5% terminal growth rate and a 7.0% terminal EBIT margin. Our WACC of 6.4% is predicated on an equity risk premium of 4%, borrowing spread of 6% and beta of 0.8. Below, we show a sensitivity analysis to our assumptions and note the current share price is discounting a terminal EBIT margin of 6.0% (which compares with La Doria’s FY19 EBITDA margin of 7.8% and EBIT margin of 4.8%, with the latter representing a trough level) and a terminal growth rate of 0.3%.
Exhibit 3: DCF sensitivity to terminal growth rate and EBIT margin (€/share)
EBIT margin |
|||||||
5.5% |
6.0% |
6.5% |
7.0% |
7.5% |
8.0% |
||
Terminal growth |
-2.5% |
9.3 |
10.0 |
10.6 |
11.2 |
11.9 |
12.5 |
-1.5% |
10.0 |
10.7 |
11.4 |
12.1 |
12.9 |
13.6 |
|
-0.5% |
10.8 |
11.7 |
12.5 |
13.3 |
14.2 |
15.0 |
|
0.5% |
12.0 |
13.0 |
14.0 |
14.9 |
16.0 |
17.0 |
|
1.5% |
13.5 |
14.7 |
15.9 |
17.0 |
18.3 |
19.6 |
|
2.5% |
16.0 |
17.6 |
19.1 |
20.5 |
22.2 |
23.7 |
|
3.5% |
20.2 |
22.3 |
24.4 |
26.3 |
28.6 |
30.7 |
|
Source: Edison Investment Research
Exhibit 4: Financial summary
€m |
2018 |
2019 |
2020e |
2021e |
2022e |
2023e |
||
December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
||||||||
Revenue |
|
|
687.9 |
717.7 |
839.7 |
814.5 |
822.6 |
834.9 |
Cost of Sales |
(581.7) |
(604.2) |
(703.5) |
(681.6) |
(687.6) |
(697.1) |
||
Gross Profit |
106.2 |
113.5 |
136.1 |
132.9 |
135.0 |
137.9 |
||
EBITDA |
|
|
52.8 |
56.0 |
72.3 |
72.5 |
74.1 |
76.0 |
Operating Profit (before amort. and except.) |
34.8 |
34.6 |
55.3 |
53.5 |
54.1 |
56.0 |
||
Intangible Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
FX Gain / (loss) |
3.2 |
(5.0) |
0.0 |
0.0 |
0.0 |
0.0 |
||
Operating Profit |
37.9 |
29.5 |
55.3 |
53.5 |
54.1 |
56.0 |
||
Net Interest |
(1.7) |
(1.8) |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
||
Profit Before Tax (norm) |
|
|
33.1 |
32.7 |
53.8 |
52.0 |
52.6 |
54.5 |
Profit Before Tax (FRS 3) |
|
|
36.3 |
27.7 |
53.8 |
52.0 |
52.6 |
54.5 |
Tax |
(8.9) |
(7.9) |
(12.4) |
(12.0) |
(12.4) |
(14.7) |
||
Profit After Tax (norm) |
27.3 |
19.9 |
41.4 |
40.1 |
40.2 |
39.8 |
||
Profit After Tax (FRS 3) |
27.3 |
19.9 |
41.4 |
40.1 |
40.2 |
39.8 |
||
Average Number of Shares Outstanding (m) |
31.0 |
31.0 |
31.0 |
31.0 |
31.0 |
31.0 |
||
EPS - normalised fully diluted (c) |
|
|
88.2 |
64.0 |
133.5 |
129.2 |
129.7 |
128.4 |
EPS - (IFRS) (c) |
|
|
88.2 |
64.0 |
133.5 |
129.2 |
129.7 |
128.4 |
Dividend per share (c) |
18.0 |
18.0 |
18.0 |
19.0 |
20.0 |
20.0 |
||
Gross Margin (%) |
15.4 |
15.8 |
16.2 |
16.3 |
16.4 |
16.5 |
||
EBITDA Margin (%) |
7.7 |
7.8 |
8.6 |
8.9 |
9.0 |
9.1 |
||
Operating Margin (before GW and except.) (%) |
5.1 |
4.8 |
6.1 |
6.6 |
6.6 |
6.6 |
||
BALANCE SHEET |
||||||||
Fixed Assets |
|
|
203.5 |
246.0 |
262.4 |
268.5 |
273.9 |
275.1 |
Intangible Assets |
5.5 |
5.1 |
4.4 |
3.7 |
3.0 |
2.3 |
||
Tangible Assets |
175.9 |
221.6 |
225.3 |
219.0 |
211.7 |
204.4 |
||
Investments |
22.1 |
19.3 |
32.6 |
45.7 |
59.1 |
68.3 |
||
Current Assets |
|
|
419.4 |
384.4 |
421.7 |
450.3 |
485.7 |
520.0 |
Stocks |
204.4 |
219.1 |
221.6 |
221.5 |
230.3 |
233.5 |
||
Debtors |
110.2 |
109.8 |
125.9 |
125.4 |
125.0 |
125.2 |
||
Cash |
86.8 |
42.0 |
60.6 |
89.9 |
116.8 |
147.8 |
||
Other |
18.0 |
13.5 |
13.5 |
13.5 |
13.5 |
13.5 |
||
Current Liabilities |
|
|
(242.3) |
(246.6) |
(259.9) |
(255.5) |
(256.7) |
(257.2) |
Creditors |
(148.4) |
(153.9) |
(167.2) |
(162.8) |
(164.0) |
(164.5) |
||
Short term borrowings |
(93.9) |
(92.7) |
(92.7) |
(92.7) |
(92.7) |
(92.7) |
||
Long Term Liabilities |
|
|
(139.3) |
(130.3) |
(130.3) |
(130.3) |
(130.3) |
(130.3) |
Long term borrowings |
(105.2) |
(98.2) |
(98.2) |
(98.2) |
(98.2) |
(98.2) |
||
Other long term liabilities |
(34.1) |
(32.2) |
(32.2) |
(32.2) |
(32.2) |
(32.2) |
||
Net Assets |
|
|
241.4 |
253.6 |
293.8 |
333.0 |
372.5 |
407.6 |
CASH FLOW |
||||||||
Operating Cash Flow |
|
|
48.2 |
38.7 |
54.5 |
56.8 |
54.5 |
58.4 |
Net Interest |
(1.7) |
(1.8) |
(1.5) |
(1.5) |
(1.5) |
(1.5) |
||
Tax |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Capex |
(46.5) |
(59.4) |
(20.0) |
(12.0) |
(12.0) |
(12.0) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Financing |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Dividends |
(9.6) |
(6.9) |
(14.5) |
(14.0) |
(14.1) |
(13.9) |
||
Other |
(4.6) |
(7.0) |
(0.0) |
0.0 |
0.0 |
0.0 |
||
Net Cash Flow |
(14.1) |
(36.5) |
18.5 |
29.3 |
26.9 |
31.0 |
||
Opening net debt/(cash) |
|
|
98.2 |
112.3 |
148.8 |
130.3 |
101.0 |
74.1 |
HP finance leases initiated |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(0.0) |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing net debt/(cash) |
|
|
112.3 |
148.8 |
130.3 |
101.0 |
74.1 |
43.1 |
Source: Edison Investment Research, company data
|
|
Research: Financials
ProCredit Holding (PCB) reported Q320 profit after tax of €11.7m (down from €21.5m profit from continued operations in Q319), which was primarily due to higher loss provisions and lower net fee and commission income year-on-year (y-o-y) driven by the COVID-19 crisis. However, we note that both gross loan book and deposit base growth remain strong, while the year to date run-rate for PCB’s cost of risk (56bp annualised) and its cost income ratio (66.5%) are slightly better than management’s expectations. Furthermore, its net interest margin (NIM) remained stable vs Q220 at 2.9%, which together with the robust lending activity resulted in a net interest income close to Q319 levels (€50.8m vs €51.0m last year).