Analyst Note| Ioannis Pontikis, CFA |
Ahead of its capital markets day event on Oct. 21, Just Eat Takeaway published a presentation and press release laying out key areas of focus for its upcoming event and reiterating fiscal 2021 guidance (order growth excluding Grubhub above 45%, gross transaction value, or GTV, in the range of EUR 28 billion-30 billion and adjusted EBITDA margin of minus 1% to minus 1.5% of GTV) as well as fresh long-term targets including guidance for 2022. The group now expects 2022 adjusted EBITDA margin to be minus 0.6% to minus 0.8% of GTV (with 2021 being the peak year of loss as previously guided), midteens percentage GTV growth in 2022 (in line with our estimates), over EUR 30 billion of GTV added in the next five years and long-term group adjusted EBITDA margin of over 5% of GTV (versus 5.3% by 2030 in our model). Although we don't have consensus data for long-term forecasts, we sense this long-term guidance (top line and bottom line) is well ahead of market expectations. With regard to the top-line five-year GTV growth guidance, we think consensus (including ourselves) has not factored in growth coming from the convenience grocery market, which the company highlights in the presentation as a focus area ("expanding our market through convenience grocery") and had previously dismissed it as not strategic. On long-term profitability targets (over 5% of GTV versus 5.3% by 2030 in our model), we view guidance to be particularly bullish, as this now includes the contribution from convenience grocery sales (which is generally perceived to be margin-dilutive). We think the main message of the Oct. 21 presentation will be laying out the strategy that will enable Just Eat Takeaway to achieve profitable and sustainable growth across regions/markets/verticals based on the firm's unique position (hybrid model and scale). We maintain our fair value estimate for Just Eat Takeaway. Shares trade deep in 5-star territory, presenting a compelling investment case for long-term investors.