R22 Group: Waiting for more post-IPO M&As
We keep R22 with a BUY rating but trim the FV to PLN 23.8 (from PLN 27.3) due to (1) later phasing of hosting acquisitions, (2) profitability pressure in Vercom from higher than initially expected growth in the enterprise client base (which due to huge SMS/email volumes also generates lower margins) and (3) also slightly lower revs from margin accretive performance marketing. As a result, we cut our 1YF/2YF/3YF EBITDA forecasts by 28%/17%/17% but sales by “only†by 5%/0%/0%. In our view, H88 and Vercom still present an attractive and growth long-term story. However the former is and will continue to be distorted by past and future hosting acquisitions while the latter should present high double-digit growth but at slightly lower profitability. Still, one of the key elements building the long-term fundamental value of R22 Group is acquisitions, both in H88 and Vercom. This was the main reason for the share capital increase in the R22 IPO.R22 Sa. R22 SA is a Poland-based holding of technology companies offering: hosting services and domain sales. The Company provides internet services and operating in promising areas of the e-economy. The Company gathers the other companies hosting services, internet domain registration worldwide and services related to the security of transmitted data-SSL certificates. The Company has three operating segments: Domains and hosting, Omnichannel communication services automating electronic communication with recipients and Telecommunication services provided by the Oxylion Group.
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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