Coronavirus Restrictions Fuel Demand for Breville's Small Home Appliances; FVE Increased 6%

We raise our fair value estimate for Breville Group by 6% to AUD 18 per share due to upgraded near-term earnings forecasts and time value of money. First-half EBIT increased 30% versus the prior comparable period, or PCP, to AUD 95 million as coronavirus restrictions fuelled strong demand for small home appliances. Breville likely benefited from increased uptake of online shopping where consumers tend to favour trusted, well-known brands, illustrating the strength of the Breville and Sage brands, which underpin the firm's narrow economic moat. We lift our fiscal 2021 EBIT forecast by 7% to AUD 138 million due to higher sales volumes, a small improvement in group margins from lower promotional activity, and favourable mix shift toward the lucrative global product segment. Accordingly, we think Breville's upgraded fiscal 2021 EBIT guidance of AUD 136 million (from AUD 128 to AUD 132 million previously) is conservative.