Comarch: Strong year ahead
We maintain CMR as a BUY and lift our FV to PLN 215 (from PLN 184.6) as we upgrade our 19E/20E EBITDA forecasts by 23%/10% resp thanks to a strong and quality backlog, especially in 2019, formed of higher margin contracts in the telco/loyalty/ERP segments. Recently won contracts for LG gave Comarch credentials in 5G, which may be key for its long-term position in the global IT telco market, especially as the wave of 5G investments is surging globally. The ZUS contract appeared to be much more difficult, which was kind of expected. However, the ZUS decision to suspend the guarantee execution until end-May’19 may suggest that a compromise is possible, which would also mean potentially paying a lower fine than currently set and fully provisioned for in 4Q18 (PLN 24.2m). We expect a strong 1Q19 with revs at PLN 315m, +16% YoY; EBITDA of PLN 34.6m, +107% YoY. On our numbers, CMR trades at an attractive 19E P/E and EV/EBITDA of 12.7x/6.7x.Comarch is a producer of IT systems for key sectors of the economy: telecommunications, finances, public administration, large companies and the sector of small and medium-sized companies. A range of Co.'s product offering includes ERP-class and financial and accounting systems, CRM systems and loyalty software, sales support and electronic document exchange systems, knowledge management, Business Intelligence, security and protection of data and many other solutions. Apart from providing IT solutions to its customers, Co. is focused on professional customer service and on providing consulting, advisory and integration services as a uniform package.
Haitong is the first international Chinese investment bank and our goal is to be the primary channel for capital flows into and out of China. During 2015 the Senior Management Team in London was expanded significantly to focus on this objective and to provide a full-service cross-asset markets business coupled with sector-focused investment banking. We work closely with our world-wide network of offices to bring a true depth of understanding to all client situations.
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