LabelVie: Saham Capital Bourse maintains its buy recommendation, with a potential upside of 36.9%

LabelVie, a leading retail company, experienced a 16.2% increase in revenue for Q2 2025, with a 13.9% rise over the first half of the year. This growth was fueled by the strong performance of supermarkets and the expansion of Atacadao, which saw a 20.7% increase in the quarter, benefiting from store openings in 2024 that expanded sales area by 33% for this format. The company's gross margin reached 14.8% in Q2 and 13.1% for the semester, reflecting an 80 basis point increase year-on-year, attributed to economies of scale and store opening rights for Supeco. Organic growth showed significant improvement, with like-for-like (LFL) growth at 3% for the semester and 4% for Q2, surpassing annual forecasts of 2.7%. By format, hypermarkets reported a LFL increase of 3.5% over six months, well above expectations, indicating a gradual recovery in purchasing power. Supermarkets also outperformed estimates with a 5.8% organic growth, benefiting from a rebound in consumer spending. Although Atacadao's growth was tempered by food deflation at 2.5% LFL, it remains a key driver for the group. Store openings contributed 10.7 points to the semester's growth. In 2024, LabelVie opened one hypermarket, 66 supermarkets, and three Atacadao stores. In the first half of 2025, 42 Supeco stores were launched, compared to just four a year earlier, primarily along the Casablanca-Rabat axis. No new large formats were inaugurated in the first half, with further Atacadao openings expected from Q4. The management has reiterated its 2025 targets, aiming for a revenue of 19 billion dirhams and a sales area expansion of 15% to 20%. By the end of June, investments reached 750 million dirhams, accounting for 50.6% of the annual budget, mainly covering expenses related to planned openings in the second half. For the full year, Saham Capital Bourse forecasts a revenue of 18.99 billion dirhams (up 15.6%), a stable EBITDA margin of 9.3%, and a net profit attributable to the group of 612 million dirhams (up 13.1%). Based on current multiples (2025E P/E of 20.3x, EV/EBITDA of 8.5x), the brokerage considers the stock attractive, supported by an expected average annual growth of 15.1% from 2024 to 2029. Karim BAHOUM, Equity Analyst at Saham Capital Bourse, stated, “We were positively surprised by the performance of supermarkets in Q2, confirming the resilience of the group's competitive positioning. Although Atacadao's LFL growth was slightly below our expectations due to deflation, the Atacadao openings in 2024 will continue to drive growth over the next 2-3 years. The confirmation of management's guidance (19 billion dirhams in revenue, 15% to 20% sales area growth) reassures us regarding the execution of large format openings starting in the second half, as integrated into our business plan and reflected in the CAPEX (50.6% of our annual forecast). We will update our business plan following the Q1 2025 results. Given the potential for a 36.9% increase from the last price, we recommend BUYING the stock.”