Maxeda - Down 30 points - Fundamental View

All,

Please find our initiation on Maxeda here.

The idea behind reviewing Maxeda was: If nobody goes on holidays, what are the Dutch and Belgians going to do at home? Or how bad could things get at Maxeda if the company would have to lose some weeks of business this year. Unfortunately, Maxeda is already not doing as well as it’s former Mezzanine holders had been hoping and an analysis of its gross margin components reveals why DIY retailers can be so volatile. 

So yes, “Desocialisation” might yet prove a tailwind for DIY retailers. But just in case that tailwind fails to make up for the prima facie disruption, liquidity could become very tight very quickly and documentation is not exactly creditor friendly.

So the name trades in the 60s for a reason. Recoveries in a downside scenario could be as low as in the 40s, while on the upside there is par to hope for. So we are not rushed here and may be picking this name up lower if we have the opportunity.

Wolfgang