Allegro: Red Hot Chili Pepper (HOLD - initiation of coverage)
We initiate coverage of Allegro with a HOLD recommendation and a price target (PT) of PLN 93/share. With a 2019 GMV of PLN 23bn, representing a c.40% share in Polish e-commerce, the company has not only beaten all the other Top-15 local players combined, but also reached the Top-10 globally. 43% of Polish consumers start their product search journey on its website. Over its 26 years of operations, Allegro has evolved from an auction platform to a go-to online ecosystem, offering the most popular marketplace and price comparison site. As such, we see Allegro as the best play on the transformation of the Polish market towards the new economy, boosted additionally by the COVID-19 pandemic. Across OC&C’s Polish e-commerce CAGR forecast of 18% in 2019-22E, we expect Allegro to grow its sales and EBITDA by 33% and 27%, respectively. The key risk in this story is the widely discussed entry of Amazon into Poland. Overall, we see Allegro’s premium valuation, at a 2021E P/E of 74x and an EV/EBITDA of 45x, as stretched, but justified.
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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