Edison Initiates Coverage on Conviviality Retail

Jul 31, 2013, 05:45 ET from Edison Investment Research

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 raising £64m.

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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 3%.

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For more information please contact:
Paul Hickman
Edison Investment Research

Victoria Buxton
Edison Investment Research

SOURCE Edison Investment Research