Comarch: Weak USD and salary pressure to hamper P&L in 4Q17E and 2018E
We cut CMR to NEUTRAL (from BUY) and cut our FV to PLN 196.60 (from PLN 232.2) on the back of 14%/10%/10% cuts to our 17E/18E/19E EBITDA forecasts from lower than previously expected profitability (negative FX impact on valuation of l-t USD contracts) higher than expected labour costs from ongoing salary pressure and expected changes in the labour law from 2019 (ZUS fee). After a record high 4Q16, we expect 4Q17 to bring rather negative surprises with an exp 23% YoY EBITDA drop to PLN 65m driven by flat YoY sales, a weak USD and growing costs. The abovementioned factors should also weigh on 2018E numbers.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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