Matalan - update

All,

Please find our updated analysis on Matalan here. We remain long the SSNs with what’s grown to be 8.5% of NAV.

While there are mild FX “headwinds” in H119, Matalan are likely to benefit from a mild “tailwind" in the second half, just when Brexit strikes. In our modelling however, we see the continued growth, the positive LfL sales on the back of store refurbishments and the generally anticyclical behaviour of the name balancing out a negative macro Shock such as Brexit. Moreover, Matalan is seemingly the most hedged company in the industry, making it walk on water when all other players are fighting for margin.

We do anticipate some weakness into Brexit (if it comes) and thus may want to remain flexible about the position from time to time. But overall we regard the SSNs as good base-load yield for the book from a company with strong idiosyncratic momentum.

Wolfgang