Wirtualna Polska – No Way Around Global Travel Restrictions
We revise our outlook on Wirtualna Polska to account for the negative impact of the coronavirus epidemic on the business environment. Everything considered, we are prompted to cut our FY2020 recurring EBITDA forecast by upwards of 30% to PLN 169m, indicating a decrease of 23% from the previous year. We blame half of the fall on the slump in the travel business, represented by the wakacje.pl vacation booking Website, and we attribute the other half to reduced spend on digital advertising. Despite a rebound anticipated in FY2021, with 2019-2021 EBITDA CAGR coming out at zero, at 14.0x 2020E EV/EBITDA and 10.4x 2021E earnings the trading multiples of WPL look much less attractive than the ratios of its peers, especially when considered in conjunction with what are likely to be weak first-quarter results, set to show 10% contraction in EBITDA, relatively low FCFE Yield of 4.0%, and increased competition risk if listed media firm Cyfrowy Polsat acquires rival websites. After updating our models, we set our new target price for WPL at PLN 63.10, and we downgrade the tock to reduce. That said, given how rapidly the global situation is developing, our valuations are subject to uncertainty, underpinned by the high sensitivity (ca. 15% 2019 EBITDA) of Wirtualna's profits to changes in the travel market.
Wirtualna Polska Holding SA is a Poland-based holding company. The Company owns entities that are engaged in the Internet publishing and broadcasting content, including operating business, technology, sports and entertainment portals, as well as electronic mail (e-mail) and electronic commerce (e-commerce). It also offers a range of advertising products, including display ads. The Company operates through such Internet portals as Wirtualna Polska, o2.pl, Money.pl, WP SportoweFakty, Dobreprogramy.pl, WP Parenting, Domodi and Homebook, among others. The Company operates domestically.
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.
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