4iG: The rise of a Hungarian technology star (initiation of coverage)
We initiate sponsored research coverage of 4iG, and we see the company as a compelling growth story (a 2020-23E EBITDA CAGR of 34%), with results expansion stemming from organic growth and market consolidation via numerous M&A. While it is the No.2 player in the segment currently, by 2022E, this could result in 4iG becoming the No.1 IT company in Hungary and a relevant player in the CEE and Balkan region, in our view. We appreciate 4iG’s strategy, aimed at transforming from commodity-like services to more sophisticated technological segments, including telecoms services, data centres, defence and satellite services. On our estimates, 4iG trades at a 24% discount vs. its peers on 2021E EV/EBITDA and 39-44% discounts on the 2022-23E EV/EBITDAs. We see the potential fair valuation range at HUF 782-996/share vs. its current share price of HUF 604.4iG Nyrt, formerly Freesoft Szoftverfejleszto es Szamitatechnikai Szolgaltato Nyrt is a Hungary-based company engaged in providing software products and consultancy. The Company's activities include development and implementation of specific, custom-made software systems, document management, knowledge management, portal and collaboration applications, complex services for business needs in the areas of implementation, support and consultation, intranet- and Internet-based development, services, graphical and creative design, and consultation, design, development and implementation of mobile business applications, as well as operation, support, outsourcing, application service provision (ASP), application portfolio management (APM), hosting and other services. The Company has three subsidiaries: Axis Consuling 2000 Kft, BankSoft Kft and HUMANsoft Kft.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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