While PIK management hailed the FY21 result as the culmination of its transformation over the past eight years, we are less impressed. PIK’s relatively slower turnover growth resulted in the turnover gap between SHP SA and PIK SA widening over the past eight years. PIK’s expense to sales ratio continues to rise and we think its recovery since FY13 was mostly driven by GP margin improvements. We think PIK may only have achieved Stage 1 of its turnaround plan (stabilisation of the business), and the new CEO may have to continue to work on Stage 2 of the turnaround plan (a change in trajectory).
