Sectors > Top Reports > Casino & Rallye Memo 300719

Casino & Rallye Memo 300719

Casino & Rallye - Time To “Rallye” (Cautiously). Sell Casino 5 year CDS. Buy Casino equity. Buy Rallye senior unsecured bonds
PUBLISHED: 30 July 2019
PAGES: 370
SUBMARKET: Casino & Rallye, Top Reports, Top Reports,


Why Read?

  • Understand how we expect Rallye to emerge from safeguard with a sale of Latam and buyout of Casino minorities – high recovery is (surprisingly) possible at Rallye; and Casino France has the potential to deleverage and normalise vs the broader European food retail space
  • Understand Casino’s liquidity moving forward and potential stresses from reverse factoring reduction
  • Understand how Casino measures up against other French and Brazilian food retailers – dissection of FCF, Adj EBITDA, sales densities, Adj EBITDA per store, LFL sales, store space trends, capex, market share, differentiated positioning
  • Understand Casino’s financial engineering – reverse factoring; sale of majority stakes in loss-making stores; derivatives; inventory purchasing and transfer arrangements
  • Understand our detailed DCF valuations of Casino France and GPA and their key sensitivities and our overall Casino SOTP – why Casino France equity is undervalued but risk is high
  • Understand seasonality in Casino France’s Adj EBITDA, working capital and FCF

What’s New?

  • Detailed analysis of Casino France’s FCF
  • Analysis of online food retail market in France and potential from Casino’s partnerships with Amazon and Ocado
  • Valuation of Cdiscount
  • Analysis of profitability by store banner for both Casino France and GPA
  • In-depth comparison of Casino and Carrefour in France
  • In-depth comparison of GPA, Carrefour Brasil and Walmart Brazil (now owned by Advent), including of their various store banners
  • Outlooks for France and Brazil food retail. Will Loi Alimentation make a difference to price competition in France?
  • Comparison of Casino to previous “stressed” food retailers – Albertsons and Tesco
  • Acquisition modelling and analysis – Carrefour to acquire Casino?

Questions Answered

  • Are Casino’s financial targets, particularly for France FCF and net debt achievable?
  • Can Casino stay liquid if its France credit lines are not extended?
  • Is Monoprix’s Adj EBIT margin and contribution to Casino France Adj EBITDA and cash flow sustainable?
  • To what extent has Casino been able to bolster its Adj EBITDA in France through sales of majority stakes in stores to master franchisees and what further cash contributions might Casino have to make?
  • How do safeguard, rehabilitation and liquidation work under French bankruptcy law?
  • Will there be a change of control at Casino, considering the safeguard proceedings and Rallye’s derivative transactions collateralised with Casino shares?
  • How lucrative is the cash and carry business in Brazil?
  • How will the reorganisation of Casino’s Latam business work?
  • Why did Rallye, Fonciere Euris, Finatis and Euris SAS file for safeguard proceedings when they did and what does this imply about asset encumbrance at Rallye?

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