Edison Initiates Coverage on Conviviality Retail
LONDON, July 31, 2013 /PRNewswire/ –
Edison Investment Research, a leading international investment research firm,
announces the initiation of full coverage of Conviviality Retail (CVR), the largest
off-licence-led convenience franchise in the UK, which joins the AIM market today after
With its core customer demographic in the C2DE socioeconomic grouping, its key point
of differentiation is its pricing strategy; at any one point it has 60% of its licensed
products on promotion, with prices materially cheaper than even the supermarkets. This is
achieved through its centralised buying function, where the group’s scale enables it to
gain the best prices from suppliers and pass them onto the individual franchisees.
New management has identified a number of growth strategies for the existing franchise
store base, as well as broadening the geographic reach from its North West England
heartland and expanding its customer base. The group operates a highly efficient cost
structure and has inherently strong cash flow due to its low capital and asset intensity.
At the issue price, it is valued at 4.4x our calendarised 2013 EBITDA forecast, a 58%
discount to its peer group. With an ungeared balance sheet and strong cash generation,
management is proposing a dividend yield of 8%, more than double the peer group average of
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SOURCE Edison Investment Research