Pozbud - Diversification as the Way Forward
After a fundamental ownership change in 2020, Pozbud at the moment is taking steps to transform into a diversified holding company. As part of its transformation, Pozbud is venturing out into development and operation of renewable energy systems with a portfolio of 460MW of photovoltaic (PV) and wind farm projects expected to bring in up to PLN 140 million in additional sales from 2024. Pozbud is in talks to onboard an international partner for the RES projects that can bring in the right credentials, technology, and access to new solutions. Another area where Pozbud recently established a presence is rolling stock maintenance; the Company, along with consortium partner Mag-Train, secured winning bids on two assignments for Poland’s intercity train operator, PKP Intercity, with a total value of PLN 594m; the first PLN 70.6m contract is likely to be signed in September, and the bigger, PLN 391.7m booking should be finalized later in the year. In the meantime Pozbud’s railway services arm is working on a lucrative GSM-for-Railways (GSM-R) project with at least two-plus more years still left and a remaining revenue of PLN 420m. The plan after the GSM-R job is completed is to to return to vying for fiber-optic and other infrastructure jobs for the Polish railways. In the third major line of business of windows and doors, Pozbud is hoping to leverage Poland’s current housing boom to bring annual sales to PLN 100m by 2025 from PLN 28m generated in 2020. With these initiatives underway, we see Pozbud as being well on track to doubling sales and significantly increasing profits in the next five years. Using relative valuation and DCF analysis, we initiate coverage of Pozbud with a target price of PLN 5.24 and a hold recommendation.
POZBUD T&R SA is a Poland-based Company active in the construction and engineering sector. The Company specializes in homebuilding and commercial building construction. It is also a manufacturer and distributor of wooden and polyvinyl chloride (PVC) chamber woodwork. The Company's product range includes wooden-aluminum, wooden and PVC windows and doors. In addition, it produces window shutters, roller blinds, garage gates, drip caps, windowsills, handles and decorative glass. POZBUD T&R SA sells also conservatories, wooden elevations and shutters. The Company operates its own commercial centre and dealers network throughout Poland. As of December 31, 2011, the Company operated one wholly owned subsidiary, Pozbud Marketing Sp. z o.o.
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