Broker snap: Kingfisher debt improving

4th Dec 2009 11:19

UBS has maintained its 'buy' recommendation on Kingfisher after the DIY group issued a forecast beating quarterly update on Thursday.'Retail profit beat our forecast by c£10m, with France and International ahead, and B&Q lagging from clearance costs,' the broker said. Following the trading statement UBS has bumped up its profit before tax estimates for fiscal 09/10 by £12m to £542m and for 10/11 by £20m to £620m. The broker notes that of the £78m improvement in pre-tax profits expected in 2010/11, '£40-50m can already be attributed to lower China and Russia losses, lower interest and using spot currency rates for earnings translation. A lower B&Q bonus provision would help even more.'The price target for Kingfisher has been lifted from 270p to 290p on a sum of the parts valuation basis. The broker said the increase in the price target stems largely from the net debt improvement; by January 2011, there is a fighting chance that the group will have net cash.'