Oesterreichische Post confirmed at HOLD, TP EUR 33.0 - Model update after in line 3Q 20 and Aras Kargo consolidation
We reiterate our HOLD rating for the share of Oesterreichische Post (the Austrian Post) slightly trimming our target price to EUR 33.0 from EUR 33.5. We are neutral on the investment case at the moment and would like to highlight the generally higher resilience to the economic environment of the company vs. other sectors but also point to the vulnerability especially of Mail earnings to direct lockdown effects, increased e-substitution going forward as well as higher than expected start-up costs of banking operations. On the positive side, the Parcel & Logistics business is a clear beneficiary of the current situation (double-digit organic volume growth) but as the business is characterised by lower margins (operating margin of 5.7% in 1-3Q 20) it cannot fully compensate for the drag on Mail earnings (operating profit margin of 12.1% in 1-3Q 20). The company reiterated its dividend policy of paying out at least 75% of net profit. Assuming an almost full payout of net profits we forecast DPS 20e of EUR 1.50 vs. DPS 19 of EUR 2.08 currently yielding over 5%.Austrian Post is a logistics and postal services provider in Austria. Its main business activities include the transport and delivery of letters, direct mail items, print media and parcels. Co.'s branch network offers postal, banking and telecommunications products and services to its customers throughout Austria. Co. is also represented by subsidiaries in 12 European markets, particularly in the parcel and logistics segment as well as in unaddressed direct mail items.
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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