Allegro: fear of the dark (stays BUY)
We reiterate our BUY recommendation on Allegro, with our price target (PT) upped to PLN 42.2/share (from PLN 31.3). The Polish consumer has not only weathered the macro and geopolitical storm well, but we expect the combination of easing inflation and fiscal stimulus to support discretionary spending in Poland in 2024E. Across that, we believe that the company’s monetisation efforts (take-rate hike, 50% jump in advertising revenues in 1Q23, introduction of fees for fintech services) should stop the margin erosion and allow the Polish EBITDA contribution to grow at a 2022-25E CAGR of 21%. We also see the downside risk related to the Mall acquisition as mostly priced in, with the upside potential of expanding the TAM by 60%+ still hidden in the long term. In this light, despite the 61% rally since our previous BUY rating, we still see Allegro’s 2024E EV/EBITDA of 13x (6% above Amazon) as an attractive entry point. We base our 12-month PT 75%/25% on the average of our DCF and Amazon’s multiples.
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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