Play – It’s not the time yet for taking profits!
Play has risen by 56% since the release of our analytical report in October 2018, ahead of Cyfrowy Polsat by 43%. Despite this, we believe that the company has further potential for growth. (1) The Q1 2019 results confirm our theory regarding breaking the downward trend on the 2018 results. Play has reported an increase in adjusted EBITDA by >11%, and we expect a better result >7% in 2019. (2) The company still generates the highest FCFE Yield in the sector (11.6-12.2% in 2019-20) and declares its payment at 40-50% in subsequent years, which in turn implies (3) the highest dividend level in the sector, DYield'19/20 5.8%/5.2% vs. CPS = 3.7%/3.7% & OPL = 0.0%/0.0%. (4) The group’s balance sheet allows this. Net debt/EBITDA is 2.7x, the company has great opportunities for further debt, hence the 5G auction next year should not break the dividend policy, which is currently the key concern of investors. (5) We are upgrading our forecasts and updating ratios for peers. The target price level is set at PLN 29.00, which implies >15% increase.
Play Communications SA Formerly known as Play Holdings 2 SARL. Play Communications SA, formerly Play Holdings 2 SARL, is a Luxembourg-based provider of financial investment services. The Company is the owner of mobile operator P4 Sp z o o, that provides a wide range of mobile telecommunications services, including voice, data transmission services, messaging, video service (PLAY NOW), as well as Value Added Services and sales of handsets and other devices, to individual and business subscribers in Poland.
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