Corporate Action: Do Not Subscribe to Breville's Share Purchase Plan

We recommend investors do not to subscribe Breville's share purchase plan, or SPP. While the SPP is at a 14% discount to the last traded price of AUD 19.81, the offer is priced at a small premium to our fair value estimate--within 3-star territory--leaving little margin of safety. We raise our fair value estimate by 3% to AUD 16.50. Half the increase is due to the time value of money, with the balance from an increase to our near-term earnings forecasts and the slight accretive impact of the equity raising. Demonstrating the significant brand strength underpinning the firm's narrow economic moat, Breville's revenue growth continues to perform strongly despite shutdowns of many retailers in key markets, and we have adjusted our near-term forecasts accordingly. Shares in Breville continue to screen as overvalued.