ANY Security Printing Company PLC: Growth secured; margins, not so much (stays HOLD)

Since our initiation on ANY PLC, the company has surprised to the upside on top-line delivery, and we now expect revenues of HUF 33.4bn in 2019E, at an annual growth rate of 12.9% over 2017-19E, compared to our initial expectation of 6.4%. This is due to a combination of a stronger performance in its strategic business units, security products and card production, as well as higher-than-expected revenues due to elections in 2018 and 2019E. However, the growth came at a lower margin, with materials expenses as a percentage of sales increasing to 68.8% in 2019E, vs. our original expectation of 67%, while labour cost pressure has been higher than anticipated. On the bottom line, the company has delivered largely in line with expectations, and our updated net income forecasts for 2019-20E are only 4% and 1% higher than expected previously, despite increases of 20% and 19% in our top-line estimates over the same period. Based on our higher growth, but lower margin forecasts, the company still trades at significant premiums of 98.3% vs. its peers on our 2020E P/E of 17x and 67.3% on our 2020E EV/EBITDA of 9.2x, while its dividend yield of 6.4% is roughly in line with its peers. While we like ANY due to its resilience to the economic cycle and its high dividend yield, we believe its growth prospects are incorporated in the share price already, given the long-term threat of digitalisation. We maintain our HOLD rating, with an updated 12-month price target (PT) of HUF 1,469/share (from HUF 1,406), offering 6% upside.