CTT: Momentum improving but...
In this note we reiterate our Neutral rating on CTT, but we raise our FV from Eur3.4 to Eur3.5 as the effect of the dividend being paid was offset by the roll-over of our FV and the positive mix effect in Mail. Momentum is improving at CTT and EBITDA in 2019E should show 10% growth, mostly supported by the acquisition of 321 Crédito but also as the company delivers on its restructuring plan. However the valuation does not look attractive and the outlook is still challenging as E&P continues to generate low EBITDA and the Mail volume decline keeps revenues under pressure. While the recent M&A activity has finally allowed investors to see a way for the bank to become profitable, it continues to show a weak performance and it should have an EBITDA loss of c. Eur16m in 2018E. The Mail activity has had a good year in 2018E, which has been supported by the mix effect and price increases. However for 2019E and 2020E the size of the mix effect is unlikely to be repeated and with volume structural decline and prices increase limited to CPI – 0.25%, Mail revenues should again be under pressure.CTT Correios de Portugas, S.A. operates through the following companies: CTT Expresso, Postal services and Logistics, which specializes in courier services, urgent mail and merchandise; Mailtec, which addresses the needs of management of written communication between suppliers and customers ensuring the production of physical and hybrid mail and the electronic management of documents; Payshop, which enables the payment of several services and utilities through a national network of more than 4,000 agents; PostContacto Advertising Mail, which provides services related to the distribution of advertising mail; and Tourline Express, which focuses on courier service and urgent mail transport.
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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