EU CONSUMER STAPLES: JAB Group; FY (to Dec) results, investor call ahead
(JABHOL; Baa1/BBB)
It somewhat quietly released its FY results two weeks ago. Fortunately not a mover. It has given a numeric target to shift near half of its portfolio towards insurance. A call for credit investors is scheduled for Wednesday - which we encourage investors to dial into. Re. equity moves this year that are not captured in below numbers; a strong +20% bounce in JDE Peets (which is its largest holding at ~1/4) is somewhat offset by a continued slide in Coty (-20%, 12% of portfolio). We have no firm view on levels here noting the existing value view on Barry 28s from primary - it gives +50bps above it with step protection. Similar +30bp pick-up to step protected Barry-31s.
- Pro-forma the recent KDP sell-down, it has LTV at 20% and is within its target 15-20% (vs. 24% in 1H)
- we had it at 22% - which was based on only the vol in the 50% it holds in public equities
- excluding the KDP sell-down (16% to 10% for $3b in cash) LTV would be at 29%
- It has not mentioned the impact of the US life insurer (Prosperity) acquisition (announced last month, due to close this year)
- It says NVA (veterinary clinics in the US) And Panera brands (US and Canada restaurant chain) is due to IPO next year
- they together make up 31% of the portfolio and if so would take public assets to around ~75%
- Re. its shift from consumer into insurance it has put a number to it now at 40-50% of the portfolio (with a focus on life insurance)
- It says insurance segment will be A- rated and hence uplift the combined portfolio rating (of the companies it owns - JAB's rating is influenced by other portfolio characteristics namely leverage/LTV)
- It is indicating it will invest in insurance through fixed income instruments, asset backed lending and speciality credit (vs. currently only in public or private equities)
- It will introduce semi-annual investor calls for credit investors with the first coming Wednesday/2nd
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