1/ We cut our rating to Sell, our EPS estimates by 14% and TP to E18
2/ We think Carrefour, with a new CEO, will need material price + promo repositioning to fix its French hypers
3/ In 2012 the price cap to main competitor Leclerc was just 0.6%, it is now 6%
# resetting that price gap would eliminate all the French EBIT (costs cannot offset it). Carrefour can’t be that aggressive
4/ Further, Carrefour is badly behind in online, with a just an 8% market share vs 48% for Leclerc
5/ The recent Brazil IPO, pricing at the bottom of the range (just 8x EV/EBITDA) has not provided material value creation
6/ Carrefour is expensive on FCF yld: 2.6% in 2017. Its capex is not going to fall far enough to change that lack of cash generation