Ocado - comment

Ocado is a jam-tomorrow story and success will sit on the shoulders of delivery in the international business. Weakness in the FY22 results of the M&S JV will have an outsize impact on current equity performance. However, our model has £2.6bn of capex on the Logistics division over the next four years and this is where the equity and bond story resides. International Logistics has begun adding customers again and the macro trend towards online grocery shopping continues, despite the fall from the high tideline of the pandemic. We have been targeting a higher yield than the c10% on offer to compensate for the risk in the International Logistics business and will keep our eye on the market reaction to the results before considering a position. More after today’s investor presentation.