Rallye/Casino - Sales in line

All,

Casino last night reported Q3 sales numbers in line with model. The only interesting piece from the call was a throw away comment from the management that majority of real estate deals have been completed so expect remaining deleveraging to come from selling businesses instead of real estate.

Casino only report quarterly sales and don’t provide update on EBITDA or cash balances. Overall, the sales numbers were in line with guidance and the Company reconfirmed their guidance for Casino France. In addition, they reconfirmed their aim to deleverage their own balance sheet, confirming the additional €2bn of asset sales are primarily going to be used to deleverage the balance sheet as opposed to resuming dividends.

In summary, not a huge amount of additional data. Sales data positive. The call appeared to be only open to questions from Investment Banks (DB, Barclays, BofA, GS, MS).

We remain positive on the name. The business is deleveraging from asset sales but underlying FCF probably remains negative at this time. For now, the 21s have traded up and in the short term we don’t expect any further events sending them materially higher. We are thus looking for new angles to explore the name.

Tomas is your analyst.

Wolfgang