FY23E: Positive Trading Update
#themes: Upbeat earnings, Load-shedding
Famous Brands released a positive trading update for FY23E as earnings were driven primarily by an increase in sales from leading brands (approximately 19% of total sales) and logistics (approximately 63% of total sales).
We attribute the sales performance to a relatively low base and load-shedding-induced demand.
HEPS is expected to increase by 27% - 57%, implying a mid-point of 487cps, which is better than our expectations (SBGSe, 464cps).
Overall, the results are positive, and it seems that load-shedding has had a net positive benefit on FY23E performance.
However, looking ahead, management notes the dramatic increase in load-shedding and challenging economic conditions have muted growth prospects across the group.
Valuation: We value FBR between R76 and R89. We estimate Famous Brands trades at 1yr Forward PE of 14.1x, 23% discount relative to its historical mean.
The group's results for the year will be published on SENS on or about Monday 22 May 2023.
A live audio webcast of the results will be held at 10H30 (SAST) on 22 May 2023. To pre-register link to: https://www.corpcam.com/FamousBrands22052023.