Zabka (ZAB.WA): We expect a solid 3Q26 with profitability at the top end of guidance but lower LFL vs. our prior forecast

We expect Zabka to deliver solid 3Q26 results, benefitting from lower exposure to the fresh category and hence lower impact of deflation vs. Dino (UW). That said, we still anticipate some LFL pressure and have trimmed our 3Q26E assumptions, reflecting a less supportive weather impact than we previously envisaged. This results in an updated FY26 LFL forecast of 4.1%, which is closer to the lower end of management guidance - consistent with the caution we have highlighted for some time. Meanwhile, we expect margins to remain resilient: while our Adj. EBITDA and net profit estimates are broadly in line with the Bloomberg median consensus, we continue to see scope for 13-26bps upside to 2026-28E Adj. EBITDA margins. Zabka appears relatively insulated from the food deflation trend in Poland in 3Q26, reflecting its lower exposure to fresh categories, and we thus expect the retailer to report the strongest LFL in the sector. We reduce our 3Q26E LFL forecast by 100bps to 4.0%, which lowers our