Purcari Wineries cut to HOLD, TP RON 16.5 - Oak still preserves value
We cut Purcari Wineries to HOLD as the share price marked an appreciation by more than 35% in 2021, while in 2022 the monetary policies indicate a potential rise in key interest rates, thus putting pressure on Romanian equities valuation.We estimate revenues to grow at a compound rate of ca. 17% annually for the period 2020-25e, forecasting the Romanian market to represent 51.5% of total sales in 2025e.
However, we expect the EBITDA margin will shrink from 31.4% in 2021e to ca. 27% in 2023e due to an estimated rise in marketing and administrative expenses for the projected period.
Despite the lack of dividend payment in 2020 due to the potential risks of COVID-19 on liquidity, in 2021 Purcari will pay out RON 26 mn to the shareholders (i.e. approx. 46% pay-out ratio of 2020 net income). We believe the company will maintain a 50% and above pay-out ratio for 2022e-25e.
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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