Jeronimo Martins

Jeronimo Martins
Company update
Portugal/ Food & Drug Retailers
Investment Research
Reason: Estimates Revision
Buy
25 March 2014
Tough price competition
Recommendation unchanged
In this report we have decreased our fair value to EUR 16.30 and maintained our Buy recommendation
12.31
Share price: EUR
closing price as of 24/03/2014
Target price: EUR
16.30
17.20
from Target Price: EUR
Reuters/Bloomberg
JMT.LS/JMT PL
Daily avg. no. trad. sh. 12 mth
Daily avg. trad. vol. 12 mth (m)
Price high 12 mth (EUR)
Price low 12 mth (EUR)
Abs. perf. 1 mth
Abs. perf. 3 mth
Abs. perf. 12 mth
1,032,414
12,660.00
18.47
11.45
-4.6%
-13.0%
-20.9%
Market capitalisation (EURm)
Current N° of shares (m)
Free float
7,736
628
32%
Key financials (EUR)
Sales (m)
EBITDA (m)
EBITDA margin
EBIT (m)
EBIT margin
Net Profit (adj.)(m)
ROCE
Net debt/(cash) (m)
Net Debt Equity
Net Debt/EBITDA
Int. cover(EBITDA/Fin.int)
EV/Sales
EV/EBITDA
EV/EBITDA (adj.)
EV/EBIT
P/E (adj.)
P/BV
OpFCF yield
Dividend yield
EPS (adj.)
BVPS
DPS
12/13
11,829
777
6.6%
528
4.5%
382
19.6%
322
0.2
0.4
19.5
0.8
11.9
11.9
17.5
23.4
6.5
2.8%
2.5%
0.61
2.20
0.31
12/14e
13,145
846
6.4%
574
4.4%
425
18.9%
328
0.2
0.4
20.9
0.6
9.5
9.5
14.0
18.2
4.9
2.5%
2.6%
0.68
2.53
0.32
12/15e
14,510
935
6.4%
636
4.4%
479
19.0%
245
0.1
0.3
28.6
0.5
8.5
8.5
12.5
16.1
4.1
3.6%
2.9%
0.76
2.97
0.36
We have revised our estimates and assumptions for Jerónimo Martins (JMT).
Accordingly, we have decreased our fair value to EUR 16.30 from EUR 17.20 and
maintained our Buy recommendation.

Challenging competitive environment in Poland… - In our last company report
(16 December), we highlighted that price competition in the Polish market should
be the main challenge for the company in 1H14 and have adjusted our estimates to
reflect that perception. In fact, by the end of October (3Q13 results presentation)
JMT informed that the market conditions in Poland should led to a decrease in its
operating profitability (“profitability warning”). It was expressed that EBITDA will
increase slightly below sales, with EBITDA margin around 20-30bps below 2012,
due to higher price investment in Poland (vs. a previous guidance of stable margin).

…The main reason for the revision of estimates - Since mid-2013, the intensity
of promotions has been reducing profitability with subsequent lower levels of EPS
growth. Moreover, the competitive environment in Poland did not change
substantially in 2014 (YTD). In this context, we adjust our estimates and expect
profitability to decrease with a forecasted consolidated EBITDA margin of 6.4% in
2014 and 2015 (vs. 6.9% in 2012 and 6.6% in 2013, respectively).

Risk of basket deflation - The company aim at maintaining the EBITDA margin
constant in 2014 (vs. 2013) which seems demanding due to the pressure in pricing
policies in Poland but also to the risk of own basket deflation in Poland and in
Portugal (the CEO already expressed that it is ‘‘concerned’’ about the 5% price
deflation in Portugal in January 2014 due to promotional efforts).

Ambitious 2014-2016 targets – JMT presented its main targets for the 2014-2016
period in its last Investor Day (28 November). In this context, the management
expects that total revenues should grow by 12%-15% (CAGR).The company
maintains the target of “LfL growth “ahead of the market”, while total Capex is seen
close to EUR 2.2b in that period, o.w. c. 70% for Poland (see, in page 7, our main
estimates vs. JMT targets).

Negative share price performance - The market had an evident reaction with a
4.8% fall following 3Q13 results presentation, in a context where EBITDA margin
confirmed its negative momentum and ended 2013 at 6.6% (c. 35 bps below 2012).

Difficult momentum for the stock should continue - 1Q14 results will remain
pressured, not only due to the market context (additional promotions with further
margin decrease) but also given the strong comparable base (LfL sales growth of
8.8% in 1Q13 due to the Easter calendar effect). A more positive evolution should
only be expected in 2H14 with a potential improvement in the competitive
environment and an acceleration in the LfL sales as the comparable base will ease.

Solid fundamentals – We maintain a positive midterm view on JMT. The company
presents a strong balance sheet (FY14e Net debt / EBITDA of 0.4x) and the
capacity to finance its projects with organic cash flow generation. JMT is trading at
premium vs. main European peers if we compare its 2014e EV/EBITDA of 9.5x vs.
7.0x for the retail sector covered by ESN. On the other hand, its P/E for 2014 is
18.2x, slightly higher than the 17.8x for the sector. The stock is down c. 13.4% YTD
(well below the -4.8% YTD performance of Eurostoxx Retail Index).
19
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18
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16
15
14
13
12
11
fev 13
mar 13
abr 13
Source: Factset
mai 13
jun 13
jul 13
JERONIMO MARTINS
ago 13
set 13
out 13
nov 13
dez 13
jan 14
fev 14
mar 14
Stoxx Food & Drug Retailers (Rebased)
Shareholders: Soc. Franc. Manuel dos Santos, SGPS,
SA 56%; Heerema Holding Company Inc
5%; Carmignac Gestion 3%;
For company description please see summary table footnote
Produced by:
Distributed by the Members of ESN
(see last page of this report)
Analyst(s): André Rodrigues
+351 21 389 68 39 [email protected]
All ESN research is available on Bloomberg (“ESNR”),
Thomson-Reuters, Capital IQ, FactSet
Jeronimo Martins
CONTENTS
Investment Case........................................................................................ 3
Estimates Revision ................................................................................... 4
Changes in Estimates
4
Outlook and targets .................................................................................. 7
2014 targets broadly reaffirmed in 4Q13 results presentation
7
Jerónimo Martins main targets vs. CaixaBI estimates
7
CaixaBI estimates vs. consensus ............................................................ 8
Valuation .................................................................................................... 9
Sum-of-the-Parts valuation
Multiple comparison
9
11
Swot Analysis .......................................................................................... 12
ESN Recommendation System .............................................................. 19
Disclaimer ................................................................................................ 20
Page 2
Jeronimo Martins
Investment Case
Challenging competitive environment in Poland… - In our last company report (16
December), we highlighted that price competition in the Polish market should be the main
challenge for the company in 1H14 and have adjusted our estimates to reflect that
perception. In fact, by the end of October (3Q13 results presentation) JMT informed that the
market conditions in Poland should led to a decrease in its operating profitability
(“profitability warning”). It was expressed that EBITDA will increase slightly below sales,
with EBITDA margin around 20-30bps below 2012, due to higher price investment in Poland
(vs. a previous guidance of stable margin).
In any case, short term profitability of the company should continue to be impacted as
Biedronka will be focused on maintaining its price leadership. EBITDA margin for FY14 is
forecasted at around 7.7% (additional 10bps erosion in 2014 vs. 2013 which is equivalent to
around 50 bps below FY12).
…The main reason for the revision of estimates - Since mid-2013, the intensity of
promotions has been reducing profitability with subsequent lower levels of EPS growth.
Moreover, the competitive environment in Poland did not change substantially in 2014
(YTD). In this context, we adjust our estimates and expect profitability to decrease with a
forecasted consolidated EBITDA margin of 6.4% in 2014 and 2015 (vs. 6.9% in 2012 and
6.6% in 2013, respectively).
Risk of basket deflation - The company aim at maintaining the EBITDA margin constant in
2014 (vs. 2013) which seems demanding due to the pressure in pricing policies in Poland
but also to the risk of own basket deflation in Poland and in Portugal (the CEO already
expressed that it is ‘‘concerned’’ about the 5% price deflation in Portugal in January 2014
due to promotional efforts).
Ambitious 2014-2016 targets – JMT presented its main targets for the 2014-2016 period in
its last Investor Day (28 November). In this context, the management expects that total
revenues should grow by 12%-15% (CAGR).The company maintains the target of “LfL
growth “ahead of the market”, while total Capex is seen close to EUR 2.2b in that period,
o.w. c. 70% for Poland (see, in page 7, our main estimates vs. JMT targets).
Negative share price performance - The market had an evident reaction with a 4.8% fall
following 3Q13 results presentation, in a context where EBITDA margin confirmed its
negative momentum and ended 2013 at 6.6% (c. 35 bps below 2012).
Difficult momentum for the stock should continue - 1Q14 results will remain pressured,
not only due to the market context (additional promotions with further margin decrease) but
also given the strong comparable base (LfL sales growth of 8.8% in 1Q13 due to the Easter
calendar effect). A more positive evolution should only be expected in 2H14 with a potential
improvement in the competitive environment and an acceleration in the LfL sales as the
comparable base will ease.
Solid fundamentals – We maintain a positive midterm view on JMT. The company presents
a strong balance sheet (FY14e Net debt / EBITDA of 0.4x) and the capacity to finance its
projects with organic cash flow generation. JMT is trading at premium vs. main European
peers if we compare its 2014e EV/EBITDA of 9.5x vs. 7.0x for the retail sector covered by
ESN. On the other hand, its P/E for 2014 is 18.2x, slightly higher than the 17.8x for the
sector. The stock is down c. 13.4% YTD (well below the -4.8% YTD performance of
Eurostoxx Retail Index).
Page 3
Jeronimo Martins
Estimates Revision
Changes in Estimates
Exhibit 1 – JMT: Main changes in estimates
New estimates
Previous estimates
Change
2014e
2015e
2016e
2014e
2015e
2016e
2014e
2015e
2016e
Pingo Doce
Recheio
3,307
816
3,379
828
3,440
841
3,315
817
3,339
841
3,363
851
-0.2%
-0.1%
1.2%
-1.5%
2.3%
-1.2%
Biedronka
8,811
10,016
11,538
9,123
10,640
12,079
-3.4%
-5.9%
-4.5%
Pingo Doce
192
199
203
191
200
202
0.6%
-0.5%
0.6%
Recheio
Biedronka
47
674
48
766
49
903
45
730
46
862
47
978
5.4%
-7.6%
3.9%
-11.1%
4.1%
-7.7%
Total Revenues (EURm)
EBITDA (EURm)
Source: Company data and CaixaBI Equity Research
1) Lowering EBITDA margin forecasts to reflect the market context
Following the 6.6% level in 2013, consolidated EBITDA margin is expected to end 2014 at
6.4%, to remain almost flat in 2015 and then to go up to 6.7% in 2016 on the back of an
expected increase in the margin of Biedronka and the lower negative impact from ARA and
Hebe that should reach breakeven in 3/4 years.
Exhibit 2 – JMT group: EBITDA margin per business segment, 2011-2017e
2011
2012
2013
2014e
2015e
2016e
2017e
7.3%
6.9%
6.6%
6.4%
6.4%
6.7%
6.7%
Pingo Doce
6.7%
5.6%
5.8%
5.8%
5.9%
5.9%
5.9%
Recheio
6.4%
6.3%
5.8%
5.8%
5.8%
5.8%
5.3%
Biedronka
7.9%
8.2%
7.8%
7.7%
7.7%
7.8%
7.8%
Services
1.8%
1.6%
1.5%
2.0%
2.0%
2.0%
2.0%
Source: Company data and CaixaBI Equity Research
Page 4
Jeronimo Martins
We also present a comparison of the adjustments made in our EBITDA margin forecasts,
mainly based on the adjustments made at Biedronka.
Exhibit 3 – JMT group: EBITDA margin per business segment, 2011-2017e
9.00%
8.00%
7.00%
6.00%
5.00%
2012
2013
Consolidated
Consolidated OLD
2014e
2015e
Pingo Doce
Pingo Doce OLD
2016e
2017e
Biedronka
Biedronka OLD
Source: Company data and CaixaBI Equity Research. OLD refers to the forecasts disclosed in our last company
report, published on 16 December.
2) and also adjusting LfL sales forecasts…
Pingo Doce and Recheio - Jerónimo Martins continues to shield its market share and
maintain its 2 main brands with positive LfL sales evolution, with stronger than expected
resilience of the Portuguese retail market. Pingo Doce presented a LfL sales growth of 3.6%
in 2013 and Recheio disclosed +0.4%. Food retail sales in Portugal continue to evolve
positively (+2.8% YoY in January), an encouraging evolution of volumes as the economy
continues to stabilize (with 3 consecutive positive figures in terms of GDP growth).
In any case, the risk of deflation in Jerónimo Martins basket is real and should remain a key
challenge for 2014. In our new estimates we expect Pingo Doce to maintain a positive
evolution in 2014 (LfL sales growth close to 1.3% vs. 0.5% in our previous estimates) with
1% growth in 1Q14. Also in the case of Recheio, we expect the top line to remain resilient
with a forecasted LfL sales evolution of 1.4% in 2014 (0.7% in our previous estimates) also
assuming 1% LfL sales growth in 1Q14.
Biedronka - We are forecasting LfL sales growth of only 0.25% in 1Q14 given the strong
comparable base as the LfL sales growth stood at 8.8% in 1Q13 due to the Easter calendar
effect (Easter was in 1Q13 and this year will be in 2Q). As a consequence, we forecast a
5.75% LfL sales growth in 2Q14.
We expect the LfL sales growth to evolve positively from 2H14 onwards to a recurrent level
close to 4.25% in 2014 and 4.75% to 5% in 2015. In any case, this is well below the double
digit LfL sales growth verified up to 1Q12. This slowdown is being offset to some extent by
the expansion plans with increase in sales area (c. 11% in our estimates for 2014).
Positively, the polish economy is gradually recovering and should increase 2.4% in 2014
and 2.7% in 2015. In fact, it already presented a 1.9% YoY growth in 3Q13 and 2.7% in
4Q13. Moreover, the sale of Food, Beverages and Tobacco presented an impressive
th
evolution of +7.5% YoY in January 2014 (the 9 consecutive monthly increase), vs. +3.0%
in December 2013 and +5.2% YoY in November.
Page 5
Jeronimo Martins
Exhibit 4 – Pingo Doce, Recheio and Biedronka – LfL sales growth (4Q09-4Q15e*)
6.0%
16.0%
Pingo Doce
Recheio
12.0%
4.0%
8.0%
2.0%
4.0%
0.0%
0.0%
-2.0%
-4.0%
4Q09
3Q10e
2Q11
1Q12
4Q12
3Q13
2Q14e
1Q15e
4Q15e
-4.0%
4Q09
3Q10e
2Q11
1Q12
2Q14e
1Q15e
4Q15e
4Q12
3Q13
2Q14e
1Q15e
4Q15e
25.0%
25.0%
Biedronka
20.0%
20.0%
15.0%
15.0%
10.0%
10.0%
5.0%
0.0%
4Q09
5.0%
0.0%
4Q09
3Q10e
2Q11
1Q12
4Q12
3Q13
3Q10e
New estimates
2Q11
Old estimates
Source: Company data and CaixaBI Equity Research. * Old estimates refer to our last company report published on 16 December.
Page 6
Jeronimo Martins
Outlook and targets
2014 targets broadly reaffirmed in 4Q13 results presentation
In its 4Q13 results presentation (25 February), the management maintained its main
targets for 2014:

JMT reiterated that intends to open 300 Biedronka stores and 1 DC in Poland in 2014.
The company should also open 50 new Hebe stores during the year (96 by the end of
2013);

10 new Pingo Doce stores in Portugal and 1 new DC (in the North);

Sales growth (constant currency) at least in line with 2013 (+10.7%) and EBITDA to
grow in line with sales (therefore maintaining the 6.6% EBITDA margin). However,
the management highlighted that given the risk of food deflation and the competitive
market environment in Poland, it cannot rule out the possibility of a slight decrease in
EBITDA margin in 2014 (vs. 2013);

ARA should close 2014 with c. 90 stores (minimum 50 new stores in the year);

CAPEX programme is expected to be close to EUR 600m / EUR 700m, of which 70%
for Poland and c. EUR 50m for Colombia.
Jerónimo Martins main targets vs. CaixaBI estimates
Exhibit 5 – JMT main targets vs. CaixaBI estimates
CaixaBI
JMT
Network
New Biedronka stores in 2014
280
300
New Pingo Doce stores in 2014
Biedronka stores in YE15
10
3,003
10
Minimum 3,000
Biedronka stores in YE16
3,268
Minimum 3,200
96
90
ARA stores in YE14
Operational data
Total revenues growth in 2014
11.1%
In line with 2013 (10.7%)
EBITDA margin in 2014
6.4%
stable vs. 2013 (6.6%)
Capex in 2014 (EUR m)
677
600 - 700
11%
2,203
11.6
12% - 15%
2,200
12
Total revenues growth in 2014-2016
Capex in 2014-2016 (EUR m)
Biedronka sales in 2016 (EUR bn)
Source: Company data and CaixaBI Equity Research
Page 7
Jeronimo Martins
CaixaBI estimates vs. consensus
As can be seen below, our estimates for the main variables are broadly in line with market
consensus; they are slightly more pessimistic for 2015e and 2016e at EBITDA level given
that our EBITDA margin is c. 20bps below the consensus for 2015 (6.4% vs. 6.6%). In terms
of net profit our estimates are roughly in line with market consensus (Bloomberg).
Exhibit 6 – JMT: CaixaBI estimates vs. consensus
Sales (EUR m)
EBITDA (EUR m)
18,000
1,300
17,000
16,119 16,000
16,000
1,000
13,145 13,162
900
13,000
12,000
800
11,000
700
10,000
935
960
846 851
600
2014e
2015e
CaixaBI
2016e
2014e
Consensus
2015e
CaixaBI
Net profit (EUR m)
2016e
Consensus
Consolidated EBITDA margin (%)
700
8.0%
567 574
600
500
1,078 1,075
1,100
14,510 14,562
15,000
14,000
1,200
480 477
426 422
400
6.5%
300
6.4% 6.5%
6.4%
6.6%
6.7% 6.7%
200
100
0
5.0%
2014e
2015e
CaixaBI
Consensus
2016e
2014e
2015e
CaixaBI
2016e
Consensus
Source: Bloomberg and CaixaBI Equity Research. Data as of 24 March 2014.
Page 8
Jeronimo Martins
Valuation
Sum-of-the-Parts valuation
We have used a Sum-of-the-Parts (SoP) method to derive the fair value for Jerónimo
Martins, calculating the discounted cash flows for its main business segments and a
multiple for the Manufacturing business.
In this context, we have applied a 30% discount to the real estate assets held for sale.
We have also considered the financial investment in BCP shares (CaixaBI fair value of
EUR 0.22 per share) and treasury shares.
We have also adjusted FY14e net debt in order to include the position of minorities in
JMR (the 49% stake held by Ahold).
Although we assume the Capex plans for the new business units (Hebe and ARA) and
also their impact on EBITDA and Sales, we do not consider them in our SoP valuation
as we continue to believe that it is too soon to have a consistent picture of these
greenfield operations in a context where operational data and visibility remains limited.
In this context, we have decreased our fair value to EUR 16.30 from EUR 17.20 and
maintained our Buy recommendation, according to ESN matrix.
Exhibit 7 – Valuation: Main assumptions:
Portugal
Retail
Risk Free Rate
Portugal
Recheio
Biedronka
4.5%
4.5%
5.0%
1.2
1.2
1.0
Market Risk Premium
4.0%
4.0%
6.0%
Cost of Equity
9.3%
9.3%
11.0%
Beta
Cost of Debt (gross)
5.5%
5.5%
6.0%
27.5%
27.5%
19.0%
4.0%
4.0%
4.9%
Debt w eight
20.0%
20.0%
20.0%
Equity w eight
80.0%
80.0%
80.0%
WACC
8.2%
8.2%
9.8%
Perpetual Grow th Rate (g)
1.0%
1.0%
2.5%
Debt Tax Rate
Cost of Debt, net
Source: CaixaBI Equity Research
Page 9
Jeronimo Martins
Exhibit 8 – Valuation: Sum-of-the-Parts (EUR m)
EV
Portugal - Retail
Portugal - Recheio
Biedronka
Industry
Stake
Stake
value
EV/EBITDA
Weight
2014e
Method
2015e
1,191
51%
607
6%
6.2
6.0
DCF
353
100%
353
3%
7.5
7.3
DCF
9,336
100%
9,336
89%
13.9
12.2
DCF
382
45%
172
2%
n.a.
n.a.
@ 14x P/E 14
10,468
100%
JM's EV
Other non core assets
35
Treasury shares
Book value w / discount
14
JM's net debt 2014e (adjusted) *
248
Total Equity
10,270
Outstanding Shares
628.4
JM's value per share (EUR)
16.30
Source: CaixaBI Equity Research. “Other non-core assets” includes the real estate assets held for sale and the investment in BCP shares. *
Net debt was adjusted by the stake of minorities at JMR.
Exhibit 9 – Valuation: Sensitivity analysis
g - Biedronka
g - Biedronka
16.30
1.5%
2.0%
2.5%
3.0%
3.5%
9.0%
16.80
17.50
18.30
19.20
20.20
WACC - Biedronka
9.5%
9.8%
15.70
15.20
16.30
15.70
17.00
16.30
17.70
17.00
18.60
17.80
10.5%
14.00
14.40
14.90
15.40
16.00
11.0%
13.20
13.60
14.00
14.40
15.00
16.30
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
16.90
17.50
18.30
19.30
20.30
RfR Biedronka
4.5%
5.0%
16.00
15.20
16.60
15.70
17.30
16.30
18.10
17.00
19.00
17.80
5.5%
14.50
15.00
15.50
16.10
16.80
6.0%
13.90
14.30
14.70
15.20
15.80
Source: CaixaBI Equity Research
Page 10
Jeronimo Martins
Multiple comparison
According to the metrics presented below, JMT is trading at a premium vs. its main
European peers if we compare 2014e EV/EBITDA, likely on the back of the expected
performance of Biedronka (that accounts for c. 67% of our forecasted sales in 2014).
Jerónimo Martins EV/EBITDA for 2014 is close to 9.5x vs. 7.0x for the retail sector
covered by ESN. On the other hand, its P/E for 2014 is 18.2x, slightly higher than the
17.8x for the sector.
On the other hand, if we compare those multiples with retail companies from emerging
markets, which is probably more appropriate due to JMT current business profile, the
company is trading at multiples below average for those peers (11.2x EV/EBITDA 14e
and 23.1x P/E 14e).
Exhibit 10 – Valuation: Peer Group
Company
Country
Rec.
Price
Target Price
24-mar-14
Fair value
Upside
Market
P/E(adj.)
Div. Yield %
EV/EBITDA
2014e
2015e
Reduce
13.73
11.00
-19.9%
13,310
15.1
13.9
3.5
4.0
7.0
6.5
6.6%
6.7%
CARREFOUR
France
Hold
27.11
27.00
-0.4%
20,426
17.9
13.9
2.8
3.2
7.3
6.6
5.0%
5.3%
CASINO GUICHARD-PERRACHON
France
Buy
82.82
100.00
20.7%
9,416
15.1
13.1
4.1
4.7
7.3
6.6
6.9%
7.1%
COLRUYT
Belgium
Hold
39.54
40.50
2.4%
6,219
17.8
16.5
2.5
2.6
9.3
8.4
7.4%
7.6%
DELHAIZE
Belgium
Hold
50.58
53.00
4.8%
4,358
15.4
14.9
2.7
3.0
4.4
4.3
6.9%
6.7%
DIA
Spain
Buy
6.10
7.30
19.6%
4,232
18.1
16.4
2.7
3.0
6.6
5.9
6.5%
6.4%
KESKO
Finland
Hold
30.86
30.50
-1.2%
2,651
16.2
14.5
4.5
4.9
6.7
6.3
4.4%
4.6%
MARR
Italy
Hold
14.01
13.50
-3.6%
804
18.2
17.0
4.3
4.3
11.3
10.4
7.0%
7.2%
RALLYE
France
Buy
31.10
38.40
23.5%
1,484
49.8
22.1
5.9
5.9
6.9%
7.1%
SLIGRO
Netherlands
Buy
28.84
33.00
14.4%
1,225
15.7
13.9
4.2
4.5
8.1
7.2
6.1%
6.3%
SONAE
Portugal
Accumulate
1.30
1.50
15.2%
1,965
31.5
23.7
2.6
2.6
6.5
5.7
8.2%
8.7%
66,090
17.8
15.1
3.3
3.7
7.0
6.6
6.2%
6.5%
Arithmetical Av erage
21.0
16.4
3.6
3.9
7.4
6.8
6.5%
6.7%
Median
17.8
14.9
3.5
4.0
7.1
6.5
6.9%
6.7%
Mkt cap total (EUR) & Weighted averages
2014e
2015e
2014e
2015e
2014e
2015e
EBITDA mg. (%)
Netherlands
AHOLD
potential cap EUR (m)
Emerging Markets
Company
Country
Rec.
Price
Target Price
24-mar-14
Fair value
Upside
Market
potential cap EUR (m)
P/E(adj.)
Div. Yield %
EV/EBITDA
EBITDA mg.
2014e
2015e
2014e
2015e
2014e
2015e
2014e
2015e
CENCOSUD
Chile
2.17
6,147
24.9
16.8
1.4%
n.d.
9.3
8.5
7.5%
n.d.
ALMACENES EXITO SA
Colombia
9.99
4,478
25.7
23.2
1.7%
1.7%
9.9
9.0
8.6%
8.7%
ORGANIZACION SORIANA
7.4%
Mex ico
2.06
3,700
16.9
14.9
0.8%
0.8%
8.5
7.7
7.2%
GRUPO COMERCIAL CHEDRAUI SA Mex ico
2.10
2,020
22.7
19.2
0.6%
0.6%
8.8
8.0
6.8%
6.9%
MAGNIT
Russia
3.07
290
11.9
9.7
2.3%
3.1%
9.6
8.1
10.7%
10.6%
MIGROS TICARET A.S
Turkey
5.03
895
n.a.
18.1
0.0%
0.5%
9.8
8.8
6.0%
6.0%
BIM BIRLESIK MAGAZALAR AS
Turkey
14.70
4,463
28.6
24.3
2.3%
2.7%
18.7
15.8
5.1%
5.1%
21,993
23.1
19.5
1.4%
1.1%
11.2
9.9
7.1%
5.1%
Arithmetical Av erage
21.8
18.0
1.3%
1.6%
10.7
9.4
7.4%
7.5%
Median
23.8
18.1
1.4%
1.2%
9.6
8.5
7.2%
7.2%
18.2
16.1
2.6
2.9
9.5
8.5
6.4%
6.4%
Mkt cap total (EUR) & Weighted averages
JERONIMO MARTINS
Portugal
Buy
12.31
16.30
32.4%
8,933
Source: ESN estimates, Bloomberg and CaixaBI Equity Research. All prices as of 24 March and expressed in EUR
Page 11
Jeronimo Martins
Swot Analysis
Biedronka operation remains the key driver for the group’s MLT growth. Moreover, the
potential recovery of the macroeconomic situation in Poland could be a relevant driver for
JMT profitability and consequently for its share price performance.
The new businesses (ARA and Hebe) will continue to mature in the next 3/4 years and could
be seen as an additional MLT source of growth. In the case of ARA (Colombia), Jerónimo
Martins intends to become one of the top 3 players in the Colombian market in 5 years, while
it sees Hebe as its second mass market retail chain in Poland in the Health & Beauty market.
SWOT Analysis
STRENGTHS
WEAKNESSES
 Top player in the supermarket and
discount segments in Portugal and
Poland with market shares close to
17.7% (#2) and 19.8% (#1), respectively
 Mature
and
already
domestic market
 Biedronka ended 2013 with 7.8%
EBITDA margin on the back of its large
scale and strong price / quality proposal
concentrated
 Portuguese operations (both retail and
wholesale) should continue to operate in
a challenging market environment (high
unemployment and low GDP growth)
 Strong Balance Sheet
OPPORTUNITIES
THREATS
 Organic
growth
opportunities
for
Biedronka, which should end 2016 with
c. 3,200 stores (economies of scale)
 Aggressive promotional campaigns in the
Polish retail market
 Strong potential of the Colombian market
where traditional retail still represents c.
60% of the market, and another 20% are
small independent operators
 Roll out of Hebe, a retail chain that
currently has 96 stores
 High execution risk for ARA in Colombia
due to the strong competition from small
“Tiendas de Barrio” (mom and pop
stores).
 GDP volatility in Poland and exposure to
devaluation of Zloty
Page 12
Jeronimo Martins
Jeronimo Martins: Summary tables
PROFIT & LOSS (EURm)
Sales
Cost of Sales & Operating Costs
Non Recurrent Expenses/Income
EBITDA
EBITDA (adj.)*
Depreciation
EBITA
EBITA (adj)*
Amortisations and Write Downs
EBIT
EBIT (adj.)*
Net Financial Interest
Other Financials
Associates
Other Non Recurrent Items
Earnings Before Tax (EBT)
Tax
Tax rate
Discontinued Operations
Minorities
Net Profit (reported)
Net Profit (adj.)
12/2011
9,838
-9,117
0.0
722
722
-209
513
513
0.0
513
513
-30.0
0.0
0.0
-14.8
468
-112
23.9%
0.0
-17.0
339
339
12/2012
10,680
-9,942
0.0
738
738
-221
517
517
0.0
517
517
-30.5
0.0
13.4
-19.4
480
-116
24.2%
0.0
-6.1
358
358
12/2013
11,829
-11,052
0.0
777
777
-249
528
528
0.0
528
528
-39.9
0.0
18.0
-3.6
503
-110
21.8%
0.0
-10.8
382
382
12/2014e
13,145
-12,298
0.0
846
846
-272
574
574
0.0
574
574
-40.5
0.0
27.3
0.0
561
-121
21.5%
0.0
-15.3
425
425
12/2015e
14,510
-13,575
0.0
935
935
-299
636
636
0.0
636
636
-32.7
0.0
27.3
0.0
631
-136
21.5%
0.0
-15.9
479
479
12/2016e
16,119
-15,041
0.0
1,078
1,078
-329
749
749
0.0
749
749
-33.3
0.0
27.3
0.0
743
-160
21.5%
0.0
-16.2
567
567
CASH FLOW (EURm)
Cash Flow from Operations before change in NWC
Change in Net Working Capital
Cash Flow from Operations
Capex
Net Financial Investments
Free Cash Flow
Dividends
Other (incl. Capital Increase & share buy backs)
Change in Net Debt
NOPLAT
12/2011
565
97.6
662
-165
0.9
498
-323
283
458
362
12/2012
588
106
694
-574
-68.4
51.2
-185
-145
-280
364
12/2013
642
79.3
721
-471
-2.4
247
-192
-77.2
-21.6
373
12/2014e
713
135
847
-651
-7.5
189
-202
-0.6
-13.4
405
12/2015e
794
250
1,044
-764
-7.5
272
-228
30.6
75.4
449
12/2016e
912
212
1,124
-732
0.0
392
-269
61.5
185
528
BALANCE SHEET & OTHER ITEMS (EURm)
Net Tangible Assets
Net Intangible Assets (incl.Goodwill)
Net Financial Assets & Other
Total Fixed Assets
Inventories
Trade receivables
Other current assets
Cash (-)
Total Current Assets
Total Assets
Shareholders Equity
Minority
Total Equity
Long term interest bearing debt
Provisions
Other long term liabilities
Total Long Term Liabilities
Short term interest bearing debt
Trade payables
Other current liabilities
Total Current Liabilities
Total Liabilities and Shareholders' Equity
Net Capital Employed
Net Working Capital
12/2011
2,276
737
203
3,216
388
229
0.0
-648
1,266
4,481
1,121
301
1,422
386
0.0
198
584
355
2,006
115
2,476
4,481
1,712
-1,504
12/2012
2,572
794
276
3,642
474
280
0.0
-375
1,129
4,772
1,212
290
1,502
571
0.0
227
798
107
2,232
132
2,472
4,772
2,032
-1,610
12/2013
2,783
806
269
3,858
575
295
0.0
-372
1,241
5,099
1,383
267
1,649
369
0.0
197
566
325
2,405
154
2,884
5,099
2,168
-1,689
12/2014e
3,159
809
302
4,269
611
336
0.0
-347
1,294
5,564
1,588
282
1,870
450
0.0
248
698
225
2,605
166
2,996
5,564
2,445
-1,824
12/2015e
3,609
824
313
4,745
689
357
0.0
-355
1,401
6,147
1,865
298
2,163
425
0.0
263
688
175
2,930
190
3,296
6,147
2,671
-2,074
12/2016e
3,998
837
331
5,166
766
394
0.0
-465
1,625
6,791
2,204
314
2,518
350
0.0
301
651
175
3,237
210
3,622
6,791
2,879
-2,286
GROWTH & MARGINS
Sales growth
EBITDA (adj.)* growth
EBITA (adj.)* growth
EBIT (adj)*growth
12/2011
13.2%
15.6%
18.3%
18.3%
12/2012
8.6%
2.3%
0.7%
0.7%
12/2013
10.8%
5.3%
2.3%
2.3%
12/2014e
11.1%
8.9%
8.7%
8.7%
12/2015e
10.4%
10.5%
10.8%
10.8%
12/2016e
11.1%
15.3%
17.7%
17.7%
Page 13
Jeronimo Martins
Jeronimo Martins: Summary tables
GROWTH & MARGINS
Net Profit growth
EPS adj. growth
DPS adj. growth
EBITDA (adj)* margin
EBITA (adj)* margin
EBIT (adj)* margin
12/2011
20.7%
20.7%
144.8%
7.3%
5.2%
5.2%
12/2012
5.5%
5.5%
-42.6%
6.9%
4.8%
4.8%
12/2013
6.8%
6.8%
3.4%
6.6%
4.5%
4.5%
12/2014e
11.2%
11.2%
5.4%
6.4%
4.4%
4.4%
12/2015e
12.7%
12.7%
12.7%
6.4%
4.4%
4.4%
12/2016e
18.3%
18.3%
18.3%
6.7%
4.6%
4.6%
RATIOS
Net Debt/Equity
Net Debt/EBITDA
Interest cover (EBITDA/Fin.interest)
Capex/D&A
Capex/Sales
NWC/Sales
ROE (average)
ROCE (adj.)
WACC
ROCE (adj.)/WACC
12/2011
0.1
0.1
24.1
79.3%
1.7%
-15.3%
34.5%
24.0%
8.2%
2.9
12/2012
0.2
0.4
24.2
259.4%
5.4%
-15.1%
30.7%
20.7%
8.2%
2.5
12/2013
0.2
0.4
19.5
189.5%
4.0%
-14.3%
29.5%
19.6%
8.2%
2.4
12/2014e
0.2
0.4
20.9
239.1%
5.0%
-13.9%
28.6%
18.9%
8.2%
2.3
12/2015e
0.1
0.3
28.6
255.7%
5.3%
-14.3%
27.8%
19.0%
8.2%
2.3
12/2016e
0.0
0.1
32.4
222.2%
4.5%
-14.2%
27.9%
20.7%
8.2%
2.5
PER SHARE DATA (EUR)***
Average diluted number of shares
EPS (reported)
EPS (adj.)
BVPS
DPS
12/2011
628.4
0.54
0.54
1.78
0.51
12/2012
628.4
0.57
0.57
1.93
0.30
12/2013
628.4
0.61
0.61
2.20
0.31
12/2014e
628.4
0.68
0.68
2.53
0.32
12/2015e
628.4
0.76
0.76
2.97
0.36
12/2016e
628.4
0.90
0.90
3.51
0.43
VALUATION
EV/Sales
EV/EBITDA
EV/EBITDA (adj.)*
EV/EBITA
EV/EBITA (adj.)*
EV/EBIT
EV/EBIT (adj.)*
P/E (adj.)
P/BV
Total Yield Ratio
EV/CE
OpFCF yield
OpFCF/EV
Payout ratio
Dividend yield (gross)
12/2011
0.8
11.4
11.4
16.0
16.0
16.0
16.0
23.7
7.2
2.3%
5.5
6.2%
6.0%
95.2%
4.0%
12/2012
0.9
12.9
12.9
18.4
18.4
18.4
18.4
25.6
7.6
2.1%
5.4
1.3%
1.3%
51.8%
2.0%
12/2013
0.8
11.9
11.9
17.5
17.5
17.5
17.5
23.4
6.5
2.6%
4.9
2.8%
2.7%
50.1%
2.5%
12/2014e
0.6
9.5
9.5
14.0
14.0
14.0
14.0
18.2
4.9
2.9%
3.8
2.5%
2.4%
47.5%
2.6%
12/2015e
0.5
8.5
8.5
12.5
12.5
12.5
12.5
16.1
4.1
3.5%
3.4
3.6%
3.5%
47.5%
2.9%
12/2016e
0.5
7.2
7.2
10.4
10.4
10.4
10.4
13.7
3.5
EV AND MKT CAP (EURm)
12/2011
Price** (EUR)
12.79
Outstanding number of shares for main stock
628.4
Total Market Cap
8,038
Net Debt
92
o/w Cash & Marketable Securities (-)
-648
o/w Gross Debt (+)
740
Other EV components
98
Enterprise Value (EV adj.)
8,228
Source: Company, Caixa-Banco de Investimento estimates.
12/2012
14.60
628.4
9,175
303
-375
678
14
9,492
12/2013
14.22
628.4
8,933
322
-372
694
-3
9,253
12/2014e
12.31
628.4
7,736
328
-347
675
-20
8,044
12/2015e
12.31
628.4
7,736
245
-355
600
-15
7,966
12/2016e
12.31
628.4
7,736
60
-465
525
-16
7,780
3.1
5.1%
5.0%
47.5%
3.5%
Notes
* Where EBITDA (adj.) or EBITA (adj)= EBITDA (or EBITA) -/+ Non Recurrent Expenses/Income and where EBIT (adj)= EBIT-/+ Non Recurrent Expenses/Income - PPA amortisation
**Price (in local currency): Fiscal year end price for Historical Years and Current Price for current and forecasted years
Page 14
Jeronimo Martins
Sector: Food & Drug Retailers/Food Retailers & Wholesalers
Company Description: Jerónimo Martins (JMT) is the 2nd largest retail group in Portugal through a 51% stake in the joint venture
“Jerónimo Martins Retalho” (JMR), with the remaining 49% stake held by the Dutch company Ahold. JMR runs the Portuguese
supermarket segment with its Pingo Doce chain (374 stores at the end of 9M13) and it also owns 41 Recheio stores operating under its
Recheio brand. In the Polish market, the Group leads the discount segment through its 2,245 Biedronka stores and is launching Hebe
network (Health and Beauty). In the industry segment, the group has a joint-venture with Unilever and it is the official distributor of
several brands for the Portuguese market. In 2013 Jerónimo Martins entered in the Colombian market (first stores opened in 1Q13)
through ARA chain.
European Coverage of the Members of ESN
A ero space & D efense
BKF
Stora Enso
POH
Rexel
CIC
Olvi
POH
Airbus Group
CIC
Banco Sabadell
BKF
Surteco
EQB
Schneider Electric Sa
CIC
Parmalat
BAK
Aviation Latecoere
CIC
Banco Santander
BKF
Talvivaara M ining Co Plc
POH
Vacon
POH
Pernod-Ricard
CIC
Bae Systems Plc
CIC
Bank Of Cyprus
IBG
Thyssenkrupp
EQB
Vaisala
POH
Raisio
POH
Dassault Aviation
CIC
Bankinter
BKF
Tubacex
BKF
F inancial Services
Finmeccanica
BAK
Bbva
BKF
Upm-Kymmene
POH
Ackermans & Van Haaren
Lisi
CIC
Bcp
CBI
B io techno lo gy
M tu
EQB
Bes
CBI
4Sc
EQB
Banca Generali
Rheinmetall
EQB
Bnp Paribas
CIC
Bioalliance Pharma
CIC
Rolls Royce
CIC
Boursorama
CIC
Epigenomics Ag
Safran
CIC
Bper
BAK
Thales
CIC
Bpi
CBI
CIC
Commerzbank
EQB
BAK
Zodiac
A irlines
M em(*) Banco Popular
M em(*) Credem
M em(*) Remy Cointreau
CIC
BDG
Sipef
BDG
BAK
Ter Beke
BDG
BAK
Vidrala
BKF
Banca Ifis
BAK
Vilmorin
CIC
EQB
Bb Biotech
EQB
Viscofan
BKF
M etabolic Explorer
CIC
Binckbank
SNS
Vranken Pommery M onopole
Neovacs
CIC
Bois Sauvage
BDG
F o o d & D rug R etailers
Transgene
CIC
Bolsas Y M ercados Espanoles Sa BKF
Bim
IBG
Wilex
EQB
Capman
POH
Carrefour
CIC
BKF
Cir
BAK
Casino Guichard-Perrachon
CIC
EQB
Colruyt
BDG
M em(*) Azimut
CIC
M em(*)
Air France Klm
CIC
Credit Agricole Sa
CIC
Zeltia
Finnair
POH
Creval
BAK
C hemicals
EQB
Deutsche Bank
EQB
Air Liquide
CIC
Corp. Financiera Alba
BKF
Delhaize
BDG
IBG
Akzo Nobel
SNS
Dab Bank
EQB
Dia
BKF
Lufthansa
A uto mo biles & P arts
M em(*) Efg Eurobank Ergasias
M em(*) Comdirect
Autoliv
CIC
Garanti Bank
IBG
Basf
EQB
Deutsche Boerse
EQB
Jeronimo M artins
CBI
Bmw
EQB
Halkbank
IBG
Dsm
SNS
Deutsche Forfait
EQB
Kesko
POH
Brembo
BAK
Ing Group
SNS
Evonik
EQB
Financiere De Tubize
BDG
M arr
BAK
Continental
EQB
Intesa Sanpaolo
BAK
Fuchs Petrolub
EQB
Gbl
BDG
M etro
CIC
Daimler Ag
EQB
Kbc Group
BDG
Henkel
EQB
Gimv
BDG
Rallye
CIC
Elringklinger
EQB
M ediobanca
BAK
Holland Colours
SNS
Grenkeleasing Ag
EQB
Sonae
Faurecia
CIC
National Bank Of Greece
IBG
K+S Ag
EQB
Hellenic Exchanges
IBG
General Industrials
Fiat
BAK
Natixis
CIC
Kemira
POH
Kbc Ancora
BDG
2G Energy
EQB
Landi Renzo
BAK
Nordea
POH
Lanxess
EQB
Luxempart
BDG
Aalberts
SNS
Leoni
EQB
Piraeus Bank
IBG
Linde
EQB
M lp
EQB
Accell Group
SNS
M ichelin
CIC
Postbank
EQB
Nanogate Ag
EQB
Patrizia Ag
EQB
Ahlstrom
POH
Nokian Tyres
POH
Societe Generale
CIC
Recticel
BDG
F o o d & B everage
Piaggio
BAK
Ubi Banca
BAK
Solvay
BDG
Agrarius Ag
EQB
Arcadis
SNS
Pirelli & C.
BAK
Unicredit
BAK
Symrise Ag
EQB
Anheuser-Busch Inbev
BDG
Aspo
POH
Plastic Omnium
CIC
Yapi Kredi Bank
IBG
Tessenderlo
BDG
Atria
POH
Bekaert
BDG
Plastivaloire
CIC
B asic R eso urces
POH
Baywa
EQB
Evolis
CIC
Porsche
EQB
Acerinox
BKF
Umicore
BDG
Berentzen
EQB
Frigoglass
IBG
Psa Peugeot Citroen
CIC
Altri
CBI
Wacker Chemie
EQB
Bonduelle
CIC
Huhtamäki
POH
Renault
CIC
Arcelormittal
BKF
Electro nic & Electrical Equipment
M em(*) Campari
BAK
Kendrion
SNS
Sogefi
BAK
Crown Van Gelder
SNS
Alstom
IBG
M ifa
EQB
Stern Groep
SNS
Ence
BKF
SNS
Valeo
CIC
Europac
BKF
Volkswagen
EQB
Inapa
B anks
M em(*) M etka
M em(*) Tikkurila
M em(*) Analytik Jena
CBI
M em(*)
EQB
CIC
Coca Cola Hbc Ag
Areva
CIC
Danone
CIC
Nedap
Barco
BDG
Ebro Foods
BKF
Neopost
CIC
CBI
Euromicron Ag
EQB
Enervit
BAK
Pöyry
POH
IBG
Evs
BDG
Fleury M ichon
CIC
Prelios
BAK
Aareal Bank
EQB
M etsä Board
POH
Gemalto
CIC
Greenyard Foods
BDG
Saf-Holland
EQB
Akbank
IBG
M ytilineos
IBG
Ingenico
CIC
Hkscan
POH
Saft
CIC
Aktia
POH
Nyrstar
BDG
Kontron
EQB
Ktg Agrar
EQB
Siegfried Holding Ag
EQB
Alpha Bank
IBG
Outokumpu
POH
Legrand
CIC
Lanson-Bcc
CIC
Skw Stahl
EQB
Banca Carige
BAK
Portucel
CBI
M obotix Ag
EQB
Laurent Perrier
CIC
Tkh Group
SNS
Banca Etruria
BAK
Rautaruukki
POH
Neways Electronics
SNS
Ldc
CIC
Wendel
CIC
Banca M ps
BAK
Salzgitter
EQB
Nexans
CIC
Lotus Bakeries
BDG
Banco Popolare
BAK
Semapa
CBI
Pkc Group
POH
Naturex
CIC
Page 15
Jeronimo Martins
General R etailers
M em(*) Opap
IBG
Ten Cate
SNS
Ferrovial
BKF
Publicis
CIC
CBI
Valmet
POH
Fraport
EQB
Rcs M ediagroup
BAK
Trigano
CIC
Vossloh
EQB
Gek Terna
IBG
Reed Elsevier N.V.
SNS
Tui
EQB
Wärtsilä
POH
Grontmij
SNS
Sanoma
POH
BAK
Zardoya Otis
BKF
Grupo San Jose
BKF
Solocal Group
CIC
SNS
Spir Communication
CIC
Hochtief
EQB
Syzygy Ag
EQB
BDG
Holcim Ltd
CIC
Talentum
POH
BKF
Imerys
CIC
Telegraaf M edia Groep
SNS
CBI
Italcementi
BAK
Teleperformance
CIC
EQB
Joyou Ag
EQB
Tf1
CIC
D'Ieteren
BDG
Sonae Capital
Fielmann
EQB
Folli Follie Group
IBG
Fourlis Holdings
IBG
Wdf
Inditex
BKF
H o useho ld Go o ds
Jumbo
IBG
Bic
CIC
Bollore
CIC
Rapala
POH
De Longhi
BAK
Bpost
Stockmann
POH
Indesit
BAK
Caf
M em(*) Seb Sa
CIC
Ctt
H ealthcare
M em(*) Industrial T ranspo rtatio n M em(*) Heijmans
Ab-Biotics
BKF
Industrial Engineering
M em(*) Deutsche Post
Almirall
BKF
Accsys Technologies
SNS
Hes Beheer
SNS
Lafarge
CIC
Ti M edia
BAK
Amplifon
BAK
Aixtron
EQB
Hhla
EQB
Lemminkäinen
POH
Ubisoft
CIC
Bayer
EQB
Ansaldo Sts
BAK
Logwin
EQB
M aire Tecnimont
BAK
Vivendi
CIC
Biomerieux
CIC
Bauer Ag
EQB
Postnl
SNS
M ota Engil
CBI
Wolters Kluwer
SNS
Biotest
EQB
Biesse
BAK
Tnt Express
SNS
Obrascon Huarte Lain
Celesio
EQB
Cargotec Corp
POH
Insurance
Diasorin
BAK
Cnh Industrial
BAK
Aegon
SNS
Draegerwerk
EQB
Danieli
BAK
Ageas
Faes Farma
BKF
Datalogic
BAK
Fresenius
EQB
Delclima
BAK
Fresenius M edical Care
EQB
Deutz Ag
Gerresheimer Ag
EQB
Dmg M ori Seiki Ag
Grifols Sa
BKF
Korian
CIC
Laboratorios Rovi
BKF
Oil & Gas P ro ducers
POH
Eni
Royal Bam Group
SNS
Galp Energia
CBI
BDG
Sacyr
BKF
Gas Plus
BAK
Allianz
EQB
Saint Gobain
CIC
Hellenic Petroleum
IBG
Axa
CIC
Salini Impregilo
BAK
M aurel Et Prom
CIC
EQB
Delta Lloyd
SNS
Sias
BAK
M otor Oil
IBG
EQB
Generali
BAK
Sonae Industria
CBI
Neste Oil
POH
Duro Felguera
BKF
Hannover Re
EQB
Srv
POH
Petrobras
CBI
Emak
BAK
M apfre Sa
BKF
Thermador Groupe
CIC
Qgep
CBI
BKF
Exel Composites
POH
M ediolanum
BAK
Titan Cement
IBG
Repsol
BKF
M edica
CIC
Faiveley
CIC
M unich Re
EQB
Trevi
BAK
Total
CIC
M erck
EQB
Gea Group
EQB
Sampo
POH
Uponor
POH
Tupras
Novartis
CIC
Gesco
EQB
Talanx Group
EQB
Uzin Utz
EQB
Oil Services
Oriola-Kd
POH
Haulotte Group
CIC
Unipol
BAK
Vbh Holding
EQB
Bourbon
Orion
POH
Heidelberger Druck
EQB
Unipolsai
BAK
Vicat
CIC
Cgg
CIC
Orpea
CIC
Ima
BAK
Zurich Financial Services
BAK
Vinci
CIC
Fugro
SNS
Recordati
BAK
Interpump
BAK
M aterials, C o nstructio n & M
Infrastructure
em(*) Yit
POH
Saipem
BAK
Rhoen-Klinikum
EQB
Kone
POH
Abertis
BKF
M edia
Roche
CIC
Konecranes
POH
Acs
BKF
Ad Pepper
EQB
Tecnicas Reunidas
BKF
Sanofi
CIC
Krones Ag
EQB
Adp
CIC
Alma M edia
POH
Tenaris
BAK
Sorin
BAK
Kuka
EQB
Astaldi
BAK
Brill
SNS
Vallourec
CIC
Stallergènes
CIC
M an
EQB
Atlantia
BAK
Cofina
CBI
Vopak
SNS
Ucb
BDG
M anitou
M em(*) Ramirent
M em(*) Technip
CIC
Ballast Nedam
SNS
Editoriale L'Espresso
BAK
H o tels, T ravel & T o urism M em(*) M ax Automation Ag
EQB
Bilfinger Se
EQB
Gl Events
CIC
Accor
CIC
M etso
POH
Boskalis Westminster
SNS
Havas
CIC
Autogrill
BAK
Outotec
POH
Buzzi Unicem
BAK
Impresa
CBI
Beneteau
CIC
Pfeiffer Vacuum
EQB
Caverion
POH
Ipsos
CIC
Compagnie Des Alpes
CIC
Ponsse
POH
Cfe
BDG
Jcdecaux
CIC
Gtech
BAK
Prima Industrie
BAK
Ciments Français
CIC
Kinepolis
BDG
I Grandi Viaggi
BAK
Prysmian
BAK
Cramo
POH
Lagardere
CIC
Ibersol
CBI
Reesink
SNS
Deceuninck
BDG
M 6-M etropole Television
CIC
Intralot
IBG
Sabaf
BAK
Eiffage
CIC
M ediaset
BAK
M elia Hotels International
BKF
Singulus Technologies
EQB
Ellaktor
IBG
Nextradiotv
CIC
Nh Hoteles
BKF
Smt Scharf Ag
EQB
Fcc
BKF
Nrj Group
CIC
M em(*)
BAK
IBG
M em(*)
CIC
CIC
Page 16
Jeronimo Martins
P e rs o na l G o o ds
CIC
A lbio ma
CIC
BAK
E.On
EQB
Fiera M ilano
BAK
Edp
CB I
Imtech
SNS
Edp Reno váveis
BAK
Lassila & Tikano ja
P OH
Elia
B DG
Gamesa
B KF
Randstad
SNS
Enagas
B KF
P ho enix So lar
EQB
Usg P eo ple
SNS
Endesa
B KF
BAK
Sma So lar Techno lo gy
EQB
T e c hno lo gy H a rdwa re & E quipm
M e me
( *)
nt Enel
Gerry Weber
EQB
So larwo rld
EQB
A lcatel-Lucent
CIC
Falck Renewables
BAK
Hermes Intl.
CIC
So lutro nic
EQB
A sm Internatio nal
SNS
Fo rtum
P OH
Hugo B o ss
EQB
S o f t wa re & C o m put e r S e rv ic
M eesm ( *) A sml
SNS
Gas Natural Feno sa
B KF
Interparfums
CIC
A ffecto
B esi
SNS
Hera
BAK
Kering
CIC
A kka Techno lo gies
CIC
Ericsso n
P OH
Iberdro la
B KF
Lo ewe
EQB
A lten
CIC
Gigaset
EQB
Iren
BAK
Luxo ttica
BAK
A ltran
CIC
No kia
P OH
P ublic P o wer Co rp
IB G
Lvmh
CIC
A madeus
B KF
Okmetic
P OH
Red Electrica De Espana
B KF
CIC
Ro o dmicro tec
SNS
Ren
CB I
Stmicro electro nics
BAK
Rwe
EQB
A didas
M e m ( *) Wdp
B DG
EQB
R e ne wa ble E ne rgy
A dler M o demaerkte
EQB
Daldrup & So ehne
EQB
A mer Spo rts
P OH
Deutsche B io gas
EQB
B asic Net
BAK
Enel Green P o wer
B eiersdo rf
EQB
Christian Dio r
CIC
Geo x
Edenred
M e m ( *) Ei To wers
P OH
CB I
BAK
M arimekko
P OH
A to s
P uma
EQB
B asware
Richemo nt
CIC
B ull
CIC
Suess M icro tec
EQB
Snam
BAK
Safilo
BAK
Cenit
EQB
Teleste
P OH
Terna
BAK
Salvato re Ferragamo
BAK
Co mptel
P OH
T e le c o m m unic a t io ns
Sarantis
IB G
Digia
P OH
A co tel
BAK
Swatch Gro up
CIC
Do cdata
SNS
B elgaco m
B DG
To d'S
BAK
Ekino ps
CIC
B o uygues
CIC
Van De Velde
B DG
Engineering
BAK
Deutsche Teleko m
EQB
BAK
Esi Gro up
Zucchi
R eal Estate
M e m ( *) Exact Ho lding Nv
P OH
M e m ( *)
CIC
Drillisch
EQB
SNS
Elisa
P OH
A edifica
B DG
Exprivia
BAK
Eutelsat Co mmunicatio ns Sa
CIC
A scencio
B DG
F-Secure
P OH
Freenet
EQB
A teno r
B DG
Gamelo ft
CIC
Go wex
B KF
B animmo
B DG
Gft Techno lo gies
EQB
Iliad
CIC
B efimmo
B DG
Guillemo t Co rpo ratio n
CIC
Jazztel
B KF
B eni Stabili
BAK
I:Fao A g
EQB
Kpn Teleco m
SNS
Cityco n
P OH
Ict A uto matisering
SNS
M o bistar
B DG
Co finimmo
B DG
Indra Sistemas
B KF
Numericable
CIC
Co rio
B DG
No vabase
CB I
Orange
CIC
Deutsche Euro sho p
EQB
Ordina
SNS
Ote
IB G
Ho me Invest B elgium
B DG
P si
EQB
Ses
CIC
Igd
BAK
Realdo lmen
B DG
Teleco m Italia
BAK
Intervest Offices & Wareho uses
B DG
Reply
BAK
Telefo nica
B KF
Leasinvest Real Estate
B DG
Rib So ftware
EQB
Telenet Gro up
B DG
M o ntea
B DG
Seven P rinciples A g
EQB
Teliaso nera
P OH
Realia
B KF
Tie Kinetix
SNS
Tiscali
BAK
Retail Estates
B DG
Tieto
P OH
Turkcell
IB G
Spo nda
P OH
To mto m
SNS
United Internet
EQB
Techno po lis
P OH
Winco r Nixdo rf
EQB
Vo dafo ne
Unibail-Ro damco
B DG
S uppo rt S e rv ic e s
Vastned Retail
B DG
B atenburg
SNS
A 2A
BAK
Vastned Retail B elgium
B DG
B runel
SNS
A ccio na
B KF
Vib Vermo egen
EQB
B ureau Veritas S.A .
CIC
A cea
BAK
M e m ( *) Ut ilit ie s
BAK
M e m ( *)
LEGEND: BAK: Banca Akros; BDG: Bank Degroof; BKF: Beka Finance; CIC: CM CIC Securities; CBI: Caixa-Banca de Investimento; EQB: Equinet bank; IBG: Investment Bank of Greece, POH: Pohjola
Bank; SNS: SNS Securities as of 7th March 2014
Page 17
Jeronimo Martins
List of ESN Analysts (**)
Ari Agopyan
Christian Auzanneau
Helena Barbosa
Javier Bernat
Dimitris Birbos
Agnès Blazy
Jean-Pascal Brivady
Giada Cabrino, CIIA
Arnaud Cadart
Niclas Catani
Jean-Marie Caucheteux
Pierre Chedeville
Emmanuel Chevalier
Florent Couvreur
Edwin de Jong
Nadeshda Demidova
Martijn den Drijver
Christian Devismes
Andrea Devita, CFA
Hans D'Haese
Ingbert Faust, CEFA
Rafael Fernández de Heredia
Stefan Freudenreich, CFA
Gabriele Gambarova
Claudio Giacomiello, CFA
Ana Isabel González García CIIA
Arsène Guekam
Bernard Hanssens
Philipp Häßler, CFA
Carlos Jesus
Bart Jooris, CFA
Jean-Michel Köster
Jean-Christophe Lefèvre-Moulenq
Sébastien Liagre
Konrad Lieder
CIC
CIC
CBI
BKF
IBG
CIC
CIC
BAK
CIC
POH
BDG
CIC
CIC
CIC
SNS
EQB
SNS
CIC
BAK
BDG
EQB
BKF
EQB
BAK
BAK
BKF
CIC
BDG
EQB
CBI
BDG
CIC
CIC
CIC
EQB
+33 1 45 96 85 80
+33 4 78 92 01 85
+351 21 389 6831
+34 91 436 7816
+30 210 81 73 392
+33 1 45 96 77 61
+33 4 78 92 02 25
+39 02 4344 4092
+33 1 45 96 77 41
+358 10 252 8780
+32 2 287 99 20
+33 1 45 96 78 71
+33 1 45 96 77 42
+33 1 45 96 77 60
+312 0 5508569
+49 69 58997 434
+312 0 5508636
+33 1 45 96 77 63
+39 02 4344 4031
+32 (0) 2 287 9223
+49 69 58997 410
+34 91 436 78 08
+49 69 58997 437
+39 02 43 444 289
+39 02 4344 4269
+34 91 436 78 09
+33 1 45 96 78 76
+32 (0) 2 287 9689
+49 69 58997 414
+351 21 389 6812
+32 2 287 92 79
+33 1 45 96 77 17
+33 1 45 96 91 04
+33 1 45 96 90 34
+49 69 5899 7436
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
Konstantinos Manolopoulos
Dario Michi
Marietta Miemietz CFA
José Mota Freitas, CFA
Henri Parkkinen
Dirk Peeters
Adrian Pehl, CFA
Victor Peiro Pérez
Francis Prêtre
Francesco Previtera
Jari Raisanen
Hannu Rauhala
Matias Rautionmaa
Eric Ravary
Iñigo Recio Pascual
Philipp Rigters
André Rodrigues
Jean-Luc Romain
Jochen Rothenbacher, CEFA
Vassilis Roumantzis
Sonia Ruiz De Garibay
Antti Saari
Paola Saglietti
Francesco Sala
Lemer Salah
Michael Schaefer
Holger Schmidt, CEFA
Tim Schuldt, CFA
Pekka Spolander
Gert Steens
Kimmo Stenvall
Natalia Svyrou-Svyriadi
Luigi Tramontana
Johan van den Hooven
IBG
BAK
EQB
CBI
POH
BDG
EQB
BKF
CIC
BAK
POH
POH
POH
CIC
BKF
EQB
CBI
CIC
EQB
IBG
BKF
POH
BAK
BAK
SNS
EQB
EQB
EQB
POH
SNS
POH
IBG
BAK
SNS
+30 210 817 3388
+39 02 4344 4237
+49-69-58997-439
+351 22 607 09 31
+358 10 252 4409
+32 2 287 97 16
+49 69 58997 438
+34 91 436 7812
+33 4 78 92 02 30
+39 02 4344 4033
+358 10 252 4504
+358 10 252 4392
+358 10 252 4408
+33 1 45 96 79 53
+34 91 436 7814
+49 69 58997 413
+351 21 389 68 39
+33 1 45 96 77 36
+49 69 58997 415
+30 2108173394
+34 91 436 7841
+358 10 252 4359
+39 02 4344 4287
+39 02 4344 4240
'+312 0 5508516
+49 69 58997 419
+49 69 58 99 74 32
+49 69 5899 7433
+358 10 252 4351
+312 0 5508639
+358 10 252 4561
+30 210 81 73 384
+39 02 4344 4239
+312 0 5508518
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
[email protected]
(**) excluding: strategists, macroeconomists, heads of research not covering specific stocks, credit analysts, technical analysts
Page 18
Jeronimo Martins
ESN Recommendation System
The ESN Recommendation System is Absolute. It means that each stock is rated on the
basis of a total return, measured by the upside potential (including dividends and capital
reimbursement) over a 12 month time horizon.
The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories:
Buy, Accumulate (or Add), Hold, Reduce and Sell (in short: B, A, H, R, S).
Furthermore, in specific cases and for a limited period of time, the analysts are allowed to rate
the stocks as Rating Suspended (RS) or Not Rated (NR), as explained below.
Meaning of each recommendation or rating:

Buy: the stock is expected to generate total return of over 20% during the next
12 months time horizon

Accumulate: the stock is expected to generate total return of 10% to 20%
during the next 12 months time horizon

Hold: the stock is expected to generate total return of 0% to 10% during the
next 12 months time horizon.

Reduce: the stock is expected to generate total return of 0% to -10% during the
next 12 months time horizon

Sell: the stock is expected to generate total return under -10% during the next
12 months time horizon

Rating Suspended: the rating is suspended due to a capital operation (takeover bid, SPO, …) where the issuer of the document (a partner of ESN) or a
related party of the issuer is or could be involved or to a change of analyst
covering the stock

Not Rated: there is no rating for a company being floated (IPO) by the issuer of
the document (a partner of ESN) or a related party of the issuer
Caixa Banco de Investimento Ratings Breakdown
Sell
5%
Reduce
4%
Buy
27%
Hold
32%
Accumulate
32%
History of ESN Recommendation System
Since 18 October 2004, the Members of ESN are using an Absolute Recommendation System
(before was a Relative Rec. System) to rate any single stock under coverage.
Since 4 August 2008, the ESN Rec. System has been amended as follow.

Time horizon changed to 12 months (it was 6 months)

Recommendations Total Return Range changed as below:
TODAY
SELL
REDUCE
-10%
HOLD
0%
ACCUMULATE
10%
BUY
20%
BEFORE
SELL
-15%
REDUCE
HOLD
0%
ACCUMULATE
5%
BUY
15%
Page 19
Jeronimo Martins
Disclaimer
The information and opinion in this report were prepared by Caixa - Banco de Investimento, SA. (CaixaBI) The information upon which this report
was based has been obtained from sources that we believe to be reliable, but we do not guarantee that it is accurate or complete. No part of this
document may be (i) copied or duplicated by any form or means, or (ii) redistributed without the prior written consent of CaixaBI.
The analysts responsible for this report have not received and will not receive direct or indirect compensation in exchange for expressing specific
recommendations or views by CaixaBI.
At any time Caixa Geral de Depósitos, CaixaBI's parent company, or any affiliated companies (or employees) may have a position subject to change
in these securities.
There are no pre-established policies regarding frequency, change or update in recommendations issued by CaixaBI and the same applies to our
coverage policy.
In the last market trade date Caixa – Banco de Investimento, SA has 0 shares of company covered in this report.
In this date (date of published report) analyst or analysts responsible for this report has 0 shares of company covered in this report.
The company or companies covered in this report had knowledge of the changes in the fair-value, recommendation included in this report or
validated the assumptions used in the report before its publication? No.
This report was initiated after the announcement of the FY13 results and was concluded on 25 March.
Opinions in this report are subject to change without notice. This document is for your private information, and is not to be constructed as an offer to
sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal. Any opinion or
recommendation contained herein and in the investments to which they refer may not be appropriate for investors due to their specific financial
position or investment targets. Investors should consider this report as only a single factor in making their investment decision.
Any recommendation and opinions contained in this report may became outdated as a consequence of changes in the environment in which the
company under analysis operates, in addition to changes in the estimates and forecast, assumptions and valuation methodology used herein. The
securities mentioned in this report may not be eligible for sales in some countries.
This report does not have any specific recipient, investment objectives nor was solicited or originated by any specific operation in which CaixaBI or
other CGD Group affiliate participate.
Investors should also note that income from the securities mentioned in this report, if any, may fluctuate and that each security's price or value may
rise or fall. Thus, investors may receive back less than initially invested. Past performance is not a guarantee for future performance. CaixaBI or
other companies in the Caixa Geral de Depósitos Group accepts no liability of any type for any indirect or direct loss arising from the use of this
report.
CaixaBI or others companies in the Caixa Geral de Depósitos Group have participated in the last years as underwriter and/or placer in public share
offerings or in others operations of the following companies: Santander Brasil (CaixaBI was one of the co-manager in the initial public offering of
Santander Brasil), CCR (CaixaBI was appointed as one of co-managers of the rights issue of CCR), Sonae Sierra Brasil (CaixaBI was appointed as
one of co-managers in the initial public offering of this company); EDP Brasil (CaixaBI was one of co-managers of offering shares by EDP); Bankia
(CaixaBI was appointed as one of co-leads in the initial public offering of this company); Inapa (CaixaBI was appointed as one of managers of the
rights issue of Inapa); EDP, Galp Energia and REN (CaixaBI was appointed by Portuguese State as adviser for next privatization operation in the
energy sector). CaixaBI was one of the advisors of the capital increase operation of Petrogal Brasil (Galp Energia); Brisa (CaixaBI was appointed as
one of the financial intermediaries of the tender offer for acquisition of the shares issue by Brisa). CaixaBI was selected by ZON Multimedia as one
of the financial advisor of the merger between ZON Multimedia and Optimus, 100% owned by Sonaecom. CaixaBI acted as Joint Bookrunner in the
Accelerated Bookbuilding offer of EDP shares (4.114% of EDP share capital) launched by Parpública. CaixaBI acted as Joint Bookrunner in the
Accelerated Bookbuilding offer of Portugal Telecom shares (6.1% of PT share capital) launched by CGD. CTT (CaixaBI was appointed as a Joint
Global Coordinator and Bookrunner in the initial public offering of this company). Espírito Santo Saúde (CaixaBI was appointed as Co-Lead
Manager in the initial public offering of this company). CaixaBI acted as Joint Bookrunner in the Accelerated Bookbuilding offer of Mota-Engil shares
(16.76% of Mota-Engil share capital) launched by Mota-Engil and Mota Gestão e Participações.
Within the last years, CaixaBI provided investment banking services to: Altri, Banif, BCP, BES, BPI, Brisa, Cimpor, Cofina, CTT, EDP, EDP
Renováveis, Galp Energia, Gescartão, Ibersol, Impresa, Inapa, Jerónimo Martins, Martifer, Media Capital, Mota Engil, Novabase, Orey Antunes,
Portucel, Portugal Telecom, Zon Optimus, Ramada Investimentos, Reditus, SAG Gest, Semapa, Soares da Costa, Sonaecom, Sonae Indústria,
Sonae, Sumol + Compal, Teixeira Duarte, REN and Sonae Capital.
Caixa Geral de Depósitos group has more than 99% of CaixaBI share capital and the Portuguese State has 100% of Caixa Geral de Depósitos
share capital.
Furthermore, CaixaBI, SA, or other affiliated companies of Caixa Geral de Depósitos Group, does and seeks to provide investment banking or other
services to the companies referred in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that
could affect the objectivity of research.
One employee of CGD Group is member of Sumol + Compal audit committee.
CaixaBI is liquidity provider for Orey Antunes, Cofina, Altri, Inapa, Ibersol, SAG and Galp Energia.
The activity of Caixa Banco de Investimento is supervised by Banco de Portugal (BoP) and Comissão de Mercado de Valores Mobiliários (CMVM).
The share price mentioned in the report is the close price of the indicated day.
Caixa Geral de Depósitos group has qualified participations (2% or more) in the following companies: none. Caixa Geral de Depósitos has a
qualified participation in the Inapa prefered shares.
Caixa Geral de Depósitos group has non-qualified but relevant participations in the following companies: Altri, Banif, BCP, BES, BPI, Brisa, Cofina,
CTT. EDP, EDP Renováveis, Galp Energia, Ibersol, Impresa, Inapa, Jerónimo Martins, Martifer, Mota Engil, Novabase, Portucel, Portugal Telecom,
Ramada Investimentos, REN, Soares da Costa, Sonae Industria, Semapa, Sonae SGPS, Sonaecom, Sonae Capital, Sumol + Compal, Teixeira
Duarte, Vista Alegre Atlantis and Zon Optimus.
Portuguese State (Parpublica) has qualified participations in the following companies: CTT, Inapa, Galp Energia and REN.
Portuguese State (Parpublica) has non-qualified but relevant participations in the following companies: Portugal Telecom and Zon Optimus.
CaixaBI reports (equity research reports) are available in our website www.caixabi.pt by request.
Recommendation System:
Since 18 October 2004, the Members of ESN are using an Absolute Recommendation System (before was a Relative Recommendation System) to
rate any single stock under coverage. Since 4 August 2008, the ESN Rec. System has been amended, with a time horizon of 12 months (it was 6
months) and a new rating scale as follows. Caixa Banco de Investimento is a Member of ESN, therefore uses the same Recommendations System
of ESN. The ESN Recommendation System is Absolute. It means that each stock is rated on the basis of a total return, measured by the upside
potential (including dividends) over a 12 months time horizon.
The ESN spectrum of recommendations (or ratings) for each stock comprises 5 categories: Buy, Accumulate (or Add), Hold, Reduce and Sell (in
short: B, A, H, R, S).
Meaning of each rating or recommendation:
Page 20
Jeronimo Martins

Buy: the stock is expected to generate a total return of over 20% during the next 12-month time horizon;

Accumulate: the stock is expected to generate a total return of 10% to 20% during the next 12-month time horizon;

Hold: the stock is expected to generate a total return of 0% to 10% during the next 12-month time horizon;

Reduce: the stock is expected to generate a total return of 0 to -10% during the next 12-month time horizon;

Sell: the stock is expected to generate a total return below -10% during the next 12-month time horizon;

Rating Suspended: the rating is suspended due to a capital operation (take-over bid, SPO, …) where the issuer or a related party of the
issuer is or could be involved or to a change of analyst covering the stock;

Not Rated: there is no rating for a company being floated (IPO) by the issuer or a related party of the issuer.
Jerónimo Martins
Update Date
Recom m endation
Fair Value
11-5-06
Hold
2.98
15-1-07
Hold
3.38
23-4-07
Under Revision
NA
23-5-07
Accumulate
4.75
6-12-07
Accumulate
6.20
21-7-08
Buy
6.20
9-12-08
Buy
5.15
1-6-09
Coverage Suspended
NA
Hold
7.25
8.05
10-12-09
12-4-10
Hold
16-12-10
Coverage Suspended
NA
27-3-13
Accumulate
17.70
16-12-13
Buy
17.20
25-3-14
Buy
16.30
Source: CaixaBI
Page 21
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Jeronimo Martins
Portugal
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