Ciech – Softer Demand Dampens Outlook
We are prompted to revise our 2020 and 2021 earnings expectations for Ciech's soda ash business after the Company reported worse-than-expected results for Q1 2020, and based on more subdued guidance for the rest of the year outlined at the first-quarter earnings call. Most crucially, demand for soda ash is seen to be weakening according to Ciech, due mainly to smaller bookings by auto makers and the construction industry. If orders already placed were to be canceled, Ciech might have to sell excess production on the sport market. With this in mind, we revise our 2020 and 2021 soda ash sales forecasts downward by 4%, and we lower the corresponding segmental EBITDA estimates by 12% and 4%, respectively. The FY2020 revisions are also underpinned by reduced expectations for second-quarter profits due to the negative impact of the coronavirus crisis on the results of the Organic Division and the Silicates Division. Further, we currently expect Ciech to end FY2020 with a higher net debt/EBITDA ratio of 2.8x, and with this comes a strong possibility that the Company will not be able to repurchase treasury shares over the coming months. We downgrade CIE from buy to hold, and we lower the target price from PLN 45.14 to PLN 38.94 per share.
Ciech is engaged in the production, trade and distribution of chemicals as well as comprehensive service activities directed at the domestic and foreign market. The main products sold by Co. are soda ash, TDI, plastics, resins, chemical fertilizers, plant protection chemicals, glass blocks and glass packaging, salt and other chemicals.
Set up in 1986, mBank (originally BRE – Export Development Bank) is Poland’s 4th largest universal banking group in terms of total assets and 5th by net loans and deposits at the end of June 2019. mBank has one of the oldest brokerages in Poland – we have been providing brokerage services since 1991 - and the biggest, serving about 300 ths clients.
We provide all brokerage services available in the Polish capital market (i.e. Warsaw Stock Exchange, non-public markets and forex) in a way that meets the expectations of all groups of investors, both individual and institutional. Participating in the dynamic growth of the Polish capital market since its inception, we have acquired competences and experience needed to provide the highest quality of service and we have won the trust and satisfaction of our Clients.
Over the past decade, mBank's Equity Research Team has been consistently ranked among the top research teams in Parkiet's annual institutional investor surveys (Parkiet is Poland's leading daily business newspaper). mBank analysts provide coverage on an extensive list of companies, mainly in Poland but also elsewhere in the CEE region: Austria, Czechia, Portugal, Ukraine and Hungary.
Clients get access to a comprehensive selection of research products including daily market insights, monthly roundups, macroeconomic views, industry- and company- specific analyses, investing strategies, earnings comments, etc.
We give our institutional clients numerous opportunities to connect with industry professionals, top executives, and leading analysts:
- Get direct access to senior management teams at listed companies (over 30 meetings in 2018),
- Engage in our many industry events, featuring listed Polish and global firms (in 2018, we hosted sector-themed conferences around industrials, chemical companies, telecoms, retail, and financials, and co-hosted a Best of Poland investors' with Commerzbank and the Warsaw Stock Exchange),
- Stay informed through an array of enlightening discussion panels, workshops, and briefing sessions with regulatory officials.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.