Iceland

All,

Attached is our updated analysis on Iceland. Tomas has re-built the P&L and CF following the company’s reclassification of certain costs and we have sandbagged the numbers somewhat, i.e. zero LfL growth, an increased roll-out, as well as additional investment in distribution. 

With LfL sales of -1%, Q3 was not as positive as we had anticipated and management have disseminated further plans on expansion and investment in distribution. Both topics are the primary fundamental risks to the name - perhaps including Brexit.

Nonetheless, we see leverage max out at 5.4x in June of this year (up from 5.0x per beginning of January) . We thus remain long the 25s with 2% of NAV. 

Tomas is the analyst,

Wolfgang