EU FINANCIALS: Servicios Financieros Carrefour - Financial profile
SFCES (-/BBB-/-)
JV between Carrefour (60%) and CNP (40%)
- Standalone credit profile BB-. Strategic subsidiary, extraordinary support expected. Rating one notch below parent.
- Technically a finco, not a bank (no banking licence) and no access to central bank funding. This create a slightly higher risk anchor.
- Supplies loans, financing, insurance to Carrefour customers in Spain.
- 8.9% margin
- 4.5% cost of risk
- Good 30% cost to income with help of BNP infrastructure
- Profit of €35m in 2023 and €37m in 2024 (net of a €41m Eur litigation expense which S&P considers a one off)
- Company management aim to increase penetration without elevating cost of risk too much, which could lead to increase profits.
- Adequate capital buffer. Growing RAC to reach 8-8.5% over 12-18 months. 7.6% in 2024. Currently fully retaining earnings. All Equity.
- Tier 1 capital 12% on Dec 2024
- Negative ratings actions will follow if Carrefour was downgraded, or the entity became less important for the parents. Rating is capped at 1 notch below CAFP.
Link to S&P initial issuer rating - https://disclosure.spglobal.com/ratings/en/regulatory/article/-/view/type/HTML/id/3383218
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BTP TECHS: (M5) Remains Above The 50-Day EMA
- RES 4: 121.93 76.4% of the Dec 5 ‘24 - Mar 14 bear leg (cont)
- RES 3: 121.43 1.618 proj of the Mar 14 - Apr 4 - 9 price swing
- RES 2: 121.00 High Feb 7 (cont) and a key resistance
- RES 1: 120.72 High May 8 and the bull trigger
- PRICE: 120.23 @ Close May 23
- SUP 1: 119.29/00 50-day EMA / Low May 14
- SUP 2: 118.76/09 Low Apr 15 / 14
- SUP 3: 117.28 Low Apr 10
- SUP 4: 116.06 Low Apr 9
A bull cycle in BTP futures remains intact and recent weakness appears to have been a correction. Key support to watch lies at 119.29, the 50-day EMA. A clear break of the average would signal scope for a deeper retracement, and open 118.76 initially, the Apr 15 low. On the upside, key resistance and the bull trigger is at 120.72, the May 8 high. Clearance of this hurdle resumes the uptrend.
