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Asseco Poland – 2Q19 results’ forecast: bottom line softer yoy?

This year’s consolidated bottom line of Asseco Poland (both reported and on the non-IFRS basis) appears to be on course to broadly match its last year’s level (stronger-than-expected 1Q19 showing, with reported/ adjusted NI improved by 16%/ 10%), refuting the turn-of-the-year anxieties over its imminent yoy decline in FY19E. True, the parent company’s results are likely to take a major hit this year (partial loss of the KSI maintenance, KSI development orders coming out lower yoy, material rise in energy and HR costs on Polish market (inclusive of PPK impact), very high FY18 base in banking segment), but – on the flip of a coin – profits of Asseco SEE, Asseco CE and Formula seem to be on a steeply ascending path (steeper than believed at the turn of 2018 and 2019), filling in the gap in the consolidated accounts (despite the ‘minority effect’). Notwithstanding the above, for the nearest quarter (2Q19) we forecast weaker yoy consolidated NI (by c. 7-8%), and (tentatively) its stabilization in yoy perspective during the second half of the year (perhaps with a minor downward slant). All in all, whereas on the basis of valuation and our perception of possible catalysts (or rather lack of thereof) on the near-term horizon we stay neutral on the stock of Asseco Poland, compared to the beginning of the year our stance has moderately warmed up; in the WSE-listed IT software & services domain our preferences continue to rest with the Company’s subsidiary – Asseco SEE.