LPP raised to BUY, TP PLN 11,000 - Adapting the expansion strategy to the new reality
We raise our recommendation to BUY from HOLD while decreasing the TP to PLN 11,000 from PLN 14,100 for Poland's apparel market leaderFollowing the sale of its significant Russian operations LPP aims to offset the foregone Eastern growth opportunities by accelerating its pace in CEE and Western Europe; as proven by the case of Germany, reaching operating profitability in Western Europe should be achievable
LPPs value-for-money brand Sinsay, which has become the top revenue contributor and is currently being rolled-out to new markets, is particularly suited to the current environment
LPP is trading at significantly lower multiples than historically and noticeably below peers
We expect LPP to continue to be able to pass on cost inflation to clients via price increases
LPP SA Gdansk is clothing manufacturing group based in Poland. Co. is engaged in the design and distribution of clothing. Co.'s headquarters is located in Gdan'sk, including designing resources for all its brands. Co.'s stores offer its customer products that include jackets, shirts, sweaters, dresses, skirts, trousers, jeans, underwear and garment products. Co. also sells promotion clothing under a special selected brand. Co.'s product offering is addressed to a variety of customers for whom separate brands and chain stores are set up. Co. launches clothing under such brand names as: RESERVED, CROPP, MOHITO, HOUSE, and PROMOSTARS.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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