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Selecta Hits Rock Bottom? Conviction Buy on SSNS at c. 50 Cents.

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    Company Profile

  • 276 Pages
  • March 2020
  • Everest Research Group
  • ID: 5131093
Why Read?

  • Understand our new base, bear and bull case projections (including for liquidity) in the new coronavirus world of lockdowns and significant disruption to both Selecta’s workplace and on-the-go points of sale
  • Understand why Selecta, trading at just over 3x Q4 19 LTM EBITDA and on a similar multiple vs FY 21E EBITDA, represents a deep value opportunity outright and compared to Italian competitor, IVS
  • Analysis of refinancing vs restructuring / liability management exercise scenarios and associated probabilities
  • Recovery rate analysis on Selecta’s Senior Secured Notes (SSNs) across base, bear and bull scenarios
  • Business analysis - segments, regions, clients, suppliers, substitutes
  • Industry overview - drivers; main private and public competitors; regulation
  • Pelican Rouge, Argenta Group and Express Vending acquisition analysis
  • Understand EBITDA potential with the expected synergies and one-off costs
  • Liquidity analysis and remaining liquidity levers
  • Understand the capital structure and the key terms of each instrument
  • Detailed DCF and trading comparables valuations

What’s New?

  • Coronavirus (COVID-19) impact on Selecta. Updated financial projections including for liquidity across base, bear and bull cases
  • Comparison of Selecta vs Italian competitor, IVS

Questions Answered

  • What is the potential impact of COVID-19 on the business, both in the short and long term?
  • Under what circumstances would liquidity break and which additional liquidity levers remain?
  • Will the business be able to deleverage post the coronavirus disruption to the extent needed to refinance?
  • What recovery can be expected on the Senior Secured Notes (SSNs)?

Table of Contents

  • View, Variant Perception & Recommendations
  • Business Analysis – UK Stores, UK Value Clothing Market
  • What Does It Take To Break Matalan?
  • Business Analysis – UK Online Clothing
  • Historic Financial Analysis & Performance v Peers
  • Seasonality & Working Capital
  • Supply Chain & Leases
  • Financial Model – Projections, Valuation, Sensitivity, Liquidity
  • Cost Comparison – Online, Store-Based & Multi-Channel Retail

Appendices:
  • Group Structure & Capitalisation
  • FX & Cotton Price Risk
  • Gross Margin Definition
  • Bond Buybacks?

Companies Mentioned

  • Selecta
  • IVS
  • Daltys
  • Maas
  • Aramark
  • Compass
  • Elior
  • JDE
  • Dallmayr
  • Lavazza
  • Starbucks
  • Coca Cola
  • Tesco
  • 7 Eleven
  • Relay