La Comer SAB de CV

The company continues to consolidate significant growth, supported by resilience in the upper-middle consumer segment. The outlook remains positive, face up to the coming quarters will be to remain growth in the face of higher comparable. Its notewor...

Lacomer continues to consolidate progress supported by commercial strategies, while profitability remained unchanged. The company will continue to show growth as the resilience of the upper middle socio-economic formats is maintained. New growth plan...

La Comer's report was slightly below our estimates and those of the consensus. The outlook is positive, but the base effect will limit growth going forward. While the report should be neutral, the valuation at 14.4x FV/EBITDA 2021E looks stretched. Despite the high base, it maintained growth. EBITDA reached MXN 732 million, reflecting a year-over-year increase of 1.7%, leaving the EBITDA margin unchanged at 10.2%.

La Comer maintained an above-sector performance, growing even in spite of a difficult comparative base. The only retailer to have increased sales. As for EBITDA, it advanced at a slower pace than revenues (+3.5% y/y) and reached MXN 749 million, while the corresponding margin contracted 40 bps to 11.3%, as a result of incremental expenses related to the pandemic, as well as higher resources allocated to meet the increase in e-commerce demand.

At its Annual Shareholders' Meeting, La Comer approved a dividend payment of MXN 0.19 per linked unit, equivalent to a total amount of MXN 206 million and representing a yield of 0.5% over current prices. This distribution, to be paid on April 26, comes as a positive surprise and exceeds our expectations of no shareholder remuneration this year in the form of dividends. Positive implication: Although the approved dividend represents a modest yield and it is lower than previous year's payment of MXN 0.40 (-52%), we consider it favorable that the company continues with its shareholders retributions, even more so when we did not expect any distributions this year.

La Comer reported in line with our estimates, highlighting once again the solid SSS advance (+16.3% y/y; 4.8x vs. We establish a PT of MXN 48.00 (16.0x FV/EBITDA 2021E). Total sales reached MXN 6.89 billion, following a 19.9% y/y growth, driven by a 16.3% increase in SSS ‒comparing very favorably vs. ANTAD self-service average performance of +3.4%‒. In our view, this exalts the benefits of its commercial strategy focused on higher socioeconomic segment. The above was achieved even despite the increase in digital channel and other pandemic-related expenses. Therefore, despite upgrading our PT to MXN 48.00, we reiterate our HOLD rating.

La Comer does not take its foot off the accelerator. Once again, La Comer exceeded our expectations and continued posting double-digit growths. Sales reached MXN 6.883 billion, representing a 24.7% y/y growth, driven by a 19.1% y/y increase in SSS (well above the 2.0% of ANTAD food retailers), reflecting its target market's stronger purchasing power, resiliency against the economic environment and its tendency for online shopping. However, we continue to believe that much of the company’s growth outlook is already incorporated in current valuation.