Agora confirmed at BUY, TP PLN 14.20 - Another record year in cinemas, recovering profits in Internet
We hike our target price from PLN 13.0 to PLN 14.2 owing to more bullish assumptions for the Internet segment coupled with a slightly lower unattributed cost forecast and confirm our BUY recommendation. After a surprisingly strong performance of the advertising market in 3Q 19 (+6% yoy) we are now more confident that the market in Poland should remain on a growth path in the upcoming quarters. We also acknowledge a good 4Q 19 in cinemas (Joker, Frozen 2, Star Wars). The year 2019 was the sixth consecutive growth year (60 mn tickets sold, up by 1% yoy), despite an exceptionally good 2018 when the movie Kler recorded over 5 mn viewers. With the consistent strategy of Agora to expand its network we expect that 2020e may be even better for the company. We also expect that the small restaurant business should be more profitable after new openings burdened the cost base in 2019 (booked in the Movies and Books business line).Agora principally produces and sells newspapers and carries out the Internet activity. Co. is also engaged in the cinema segment through its subsidiaries, Helios S.A. and Next Film Sp. z o.o., and in the outdoor segment through its subsidiary, AMS S.A. Co. controls radio broadcasting companies and is a publisher in magazines, periodicals and books segment. Moreover, Co. and its subsidiaries provide printing services for external clients in printing houses belonging to Co. and its subsidiary, Agora Poligrafia Sp.z o.o. Co. is also engaged in TV segment by holding shares in Stopklatka S.A. Co. and its subsidiaries also engage in projects related to production and coproduction of movies.
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