Morrisons Memo 140122
- Understand how resilient Morrisons’ EV, FCF, leverage and liquidity are to potential revenue loss: (1) to Aldi as Aldi executes on its planned store openings to 2025; and (2) to normalisation of COVID-induced food stock-piling
- Understand how well covered Morrisons’ to-be-issued Senior Secured Notes (SSNs) and Senior Notes (SNs) are across our base and bear cases (assuming these are a straight terming out of Morrisons’ Senior Secured and Junior Bridge Facilities) and their risk relative to ASDA’s SSNs
- Catchment area analysis of extent of competition Morrisons may face from each of Aldi’s planned new store openings to 2025
- Comparison of Morrisons’ KPIs vs other UK food retailers – sales and EBITDA densities, store estates, rent levels, margins, cash generation
- Financial projections, DCF valuation and sensitivities, across base and bear cases
- Has Morrisons already absorbed, over FY 14- FY 16, most of the competitive impact from Aldi’s rise or is Morrisons still particularly at risk of further market share loss to Aldi from the latter’s plans to open a further c. 300 stores by 2025?
- How resilient is Morrisons’ pro forma capital structure to revenue loss to Aldi from Aldi’s planned new store openings?
- View, Variant Perception & Recommendations
Business Overview & Analysis
Historic Financials Analysis
Financial Projections, Valuation & Sensitivities – Base & Bear Cases