Greece/Taxation: According to press reports, Greek government is planning to implement a flat 18% VAT rate for all services and commodities with the exception of medicines.
This tax-reform should come into force in H2 2015 leading to:
In all, a potential flat 18% VAT rate should boost earnings outlook for retailers (especially Jumbo as domestic sales accounted for 75% of group total in fiscal H1 2015a).
Assuming that: a) VAT cut to a flat 18% takes effect as of July 2015, and b) Jumbo prices remain stable at current levels (since we believe Jumbo will not pass a potential VAT reduction to clients), this should, ceteris paribus, lead to group gross margin enhancement of 304bps to 55.24% (+420bps as far as Greece is concerned) vs our base line estimate of 52.2% for fiscal 2016e.
This, in turn, should trigger fiscal 2016e group net earnings upgrades of 12% to EUR137.3m against our call of EUR122.4m.
Potential 2016e group EPS upgrades on 18% flat VAT implementation
|Current BETAe||Post flat 18% VAT||Revisions|
Senior Equity Analyst
BETA Securities S.A.
29 Alexandras Ave.
GR – 11473