Comarch: Weak 2017 should bring 2018 relief
We upgrade CMR to BUY (from NEUTRAL) although we cut our FV to PLN 177 (from PLN 196.6) on the back of 6%/9%/8% cuts to our 18E/19E/20E EBITDA forecasts from lower than previously expected profitability coming mainly from ongoing expected salary pressure (at ca. +8% YoY 18-19E). After a disappointing 2017, we expect CMR to visibly speed up its results momentum driven predominantly by the low base in 2017 and strong backlog at ca. +15% YoY. On top, negative pressure on the top-line and EBIT from unfavorable FX should gradually soften, while ongoing measures to upwardly reprice contracts for Polish clients offers potential upside to EBIT/bottom-line. Execution of the ZUS contract remains the main mid-term risk for us.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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