Big C Supercentre

Big C Supercentre Plc (BIGC)
 

BIGC’s private placement will neither ensure sufficient funding for its five-year plan nor remove the rights issue overhang. Meanwhile, the latest results from rival Tesco suggests that business is not yet back to pre-flood levels, but this will be mitigated by insurance coverage. BIGC’s valuation may be relatively cheap at 23x CY12 P/E vs. peers’ 28x, but it carries an overhang from a future rights issue and earnings growth that has already peaked in CY11. No change to our DCF-based target price (10.8% WACC, 1% LTG). Neutral maintained.