The last call to believe in life beyond HGBs

We made some changes to our estimates after the outstanding Q2 report. As a result, we
lift our 12-m ex-div TP to 2,490 HUF/sh from 2,450 HF/sh, as well as our gross DPS
expectation to HUF 214 from HUF 189. The stock offers roughly 60% upside potential on
a 12-month time horizon. We reiterate our Buy recommendation.
 As known, ANY posted a net profit of HUF 1.5bn for the first half of 2023, thanks to the
exceptionally high Q2 net of HUF 1bn. Even though this translated into a roughly 9% YoY
drop, earnings deteriorated horribly in the second half of 2022 due to the steep rise in
material and energy costs. This year, trends are very different. On the revenues’ side, they
managed to build higher input costs in their selling prices. Moreover, ANY is well prepared
for any swings in energy prices. In March, we emphasized that sooner or later investors
should focus on longer term goals, so it’s worth thinking of the future. We pointed out that
high yield environment (especially in Hungary) and uncertainty will not last forever and it’s
also worth thinking about life beyond the risk-free Hungarian Government Bonds.
 Why? (1) ANY offers outstanding dividend yield even if the stock is no doubt characterized
by low liquidity. (2) ANY is the only Hungarian stock, which could consistently beat even
the S&P 500 index in HUF terms by 3%points per annum over the last 10 years, with an
accumulated total return of more than 500% to date. In addition, we have a strong reason
to believe that this trend may continue. (3) ANY has started to benefit from the 10-year
deal signed with Angola last year for the supply of the Angolan passport system, being
worth EUR 130mn. This will massively contribute to next years’ profits.
 ANY may distribute a gross DPS of 214 HUF/sh to its shareholders next summer. Even
though ANY trades at a premium valuation vs. the Hungarian stock index based on PE
ratios (ANY at 8.1x 24E EPS vs. BUX at 5.7x 24E EPS), it offers a DivY of 12.6%. This
translates into a 4.9% premium above the 10Y HU Govt. Bond (vs. historic avg. of 2.7%).