B4B GY – Closing +14.5% ABS, +12.5% REL – Cashing out

*Optionality worked – Had a great performance after all the MSCI flow was out of the way

*We still see the supermarket chains in Europe as being cheap but given relative performance of B4B we think the timing is right to book profit

*Still potential for mergers in the European retail space – especially after seeing ATD’s approach for CA FP

*The big banks have still not caught onto the B4B trend with only 1 Buy recommendation showing on BBG

*We will look at entry points lower if we see a decent sell-off again

B4B GY – UPDATE – BUY -8% to date

Tuesday • 15 December 2020 • 09:29

– Results upper end of guidance while outlook muted due to pandemic – EUR 0.7 dividend proposed – expects a return to sustainable sales and earnings growth after the pandemic and confirms its ambition to gain further market share – Up +4% this morning on the back of the results

-Our thoughts: We continue to like B4B GY – Results stronger than most analysts’ expected while it was expected that the outlook would reflect the lockdown in Germany, we continue to find B4B very cheap and have a price target of EUR 15 based on our DCF valuation. Stock can double in 2021

B4B GY – A Christmas treat – we see +70% upside with a potential catalyst coming up next week

Wednesday • 11 November 2020 • 11:25

*We have a price target of EUR 15 based on our DCF valuation versus the current offer at EUR 8.48 and see the end of the additional acceptance period on 17th November as a potential catalyst

*Share price been depressed since 14th September when EP Global (Ran by Czech billionaire Kretinsky) launch their zero premium EUR 8.48 offer

*Monday’s price action shows that market is starting to look at the fundamentals again as the stock now trading 1% through terms

*MSCI announcement today excluding B4B GY from the index effective 30th November causing a bit of weakness today – these index events tends to be pre-played up to the effective date meaning the weakness is not just expected for the actual effective day but more spread out

*Kretinsky has been using the March sell-off as an opportunity to get passed the 30% threshold so he can creep higher in an already very discounted name – next disclosure level is 50% and given he has launched a bid he is now free to further increase stake – this means that in case of a further sell-off the price could well be getting further support

*Offer should have gotten rid of ongoing sellers as it has provided an exit opportunity

*B4B has underperformed the Dax by 4% since the offer was announced – and almost 30% since March

*Since the offer was launched B4B GY has released better than expected earnings as the market share gains and the overall Covid-19 resilience after the first rounds of European lockdowns

*Likely that some takeover speculation will continue to be in the name given the creep up optionality that EP Global now has as they have not disclosure requirements between 30-50% and do not need to make another offer (although they of course can launch new offers) – Press has over the last couple years also speculated about potential US buyers for the name

The below 1 year chart relative to CA FP and the DAX highlights the opportunity the sell-off created for Kretinsky in B4B