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IS SAINSBURYS' CASH PLEA FOR EXPANSION SENSIBLE?

<strong>SAM HART </strong> CHARLES STANLEY<br />&ldquo;We regard the capital raising and acceleration in space growth as a sensible strategic move. With the valuation looking undemanding and the shares underpinned at current levels by asset backing arguments, we recommend using share price weakness associated with the placing to add to holdings.&rdquo;<br /><br /><strong>CAROLINE GULLIVER </strong> EXECUTION<br />&ldquo;Sainsburys&rsquo; capital raising highlights its lack of financial flexibility resulting from its low level of operating cash flow, profit margins and returns. We remain sellers believing that that the premium stock price rating is discounting too much profit recovery, too soon.&rdquo;<br /><br /><strong>NICK BUBB </strong> PALI INTERNATIONAL<br />&ldquo;Today&rsquo;s capital raise is a big surprise, as gearing did not seem to be a problem, but Sainsbury&rsquo;s wants the money to accelerate new space opening. Nobody should begrudge them that &ndash; even if the timing is a bit cheeky &ndash; as sales momentum remains very strong.&rdquo;<br />