Play – Thriving Amid a Pandemic
Play outperformed the WIG broad market benchmark by 17.6pp in the last three months, but it still has more rom to run in our view. 2020 first-quarter earnings came out strong, with APRU up by an impressive 4.7% from the same period a year earlier – a sign that the Polish telecommunications market is on the rise. Play lost only 47,000 post-paid customers in the first quarter, equivalent to just 0.5% of the mobile base, confirming that its "value over volume" approach is working. Last but not least, Play generated superb FCFE of PLN 340m (after leases) in Q1, nearly twice what was delivered the year before. Based on the stellar first-quarter showing, demonstrating resilience in the face of the coronavirus crisis, we have raised our projections for Play by 7% 2020E adjusted EBITDA and 5% 2021E earnings; on the updated estimates, PLY is currently trading at an attractive 5.8x EV/EBITDA. An even more interesting update from the point of view of equity investors might be the upward revision to our FY 2020 FCFE forecast from PLN 733m to PLN 919m (Play itself is guiding for PLN >800m), implying FCFE yield close to 12% – the key upside catalyst for the stock right now. We maintain a buy rating for PLY, with the price target raised to PLN 35.70 per share.
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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