ANY Security Printing - Record EPS Of HUF 89 In ‘19

ANY Security Printing - Instant Earnings Comment

Accumulate

Target price (12M ex-div): HUF 1,450 (unch.)

Record EPS of HUF 89 (+12% YoY) in ‘19

• Highlights: ANY reported its Q4/19 earnings today. Briefly, ANY reached a net income of HUF 269mn or HUF 19 per share (+12% YoY) in Q4/19, which means that the Company earned HUF 1,278bn or HUF 89 per share in 2019. Net sales rose 20% YoY to HUF 8.9bn as a result of Hungarian municipal elections. Reported EBITDA amounted to HUF 801mn, up by 34% YoY in Q4. EBIT grew by 55% YoY to HUF 476mn. All in all, ANY achieved an EPS of HUF 89 per share, ahead of our EPS estimate of HUF 86 per share, implying a DPS of HU 91 per share, implying a DIVY of 7.2% based on the previous closing price.
• In 2019, total sales growth was predominantly driven by EU and municipal elections as well as increasing export volumes. These factors supported the solid profit growth as well, but personnel expenses also jumped 19% YoY due to (1) wage improvement and (2) overtime related to elections. Total sales rose 12% YoY to HUF 34.1bn in ‘19. EBIT amounted to HUF 2.1bn (+12% YoY), while net profit was also up by 12%, totalling HUF 1.27bn in the last year.
• Covid-19: We believe that ANY is well-prepared for the spread of coronavirus as they have built significant inventories to cover the production for the next 4-6 months. However, ongoing year might be challenging. We think that roughly 15-20% of the total sales could be exposed to the epidemic if deliveries needed to be shifted. That said, the virus would emerge the importance of security products (eg. identification), which might have a positive impact over the next years.
• According to our base case, revenues are expected to drop c3% in 2020 due to the lack of elections, but we have to count on disruption costs if coronavirus outbreaks in Hungary. However, net profit is expected to be flattish, because the company will enjoy further cost savings driven by low level of rental costs after the inauguration of the new production plant. It will also mean significantly lower CAPEX level for 2020 (roughly in line with our estimated depreciation of HUF 1.3bn).
• Recommendation: We assume that ANY is one of the safest bets, if markets tumble due to its business model. Therefore, we stay Accumulate on ANY, with a 12m TP of HUF 1,450 per share, implying 22% upside from the previous closing.