Asseco Poland: profitability rebound ahead (stays BUY)
We reiterate our BUY rating on Asseco Poland and cut our price target (PT) to PLN 103.0 (from PLN 112.3), implying 41% upside potential. Our PT is based on the weighted average of our DCF (implying a PT of PLN 97.0/share) and our comparative valuation (implying a PT of PLN 121.2/share). ACP’s stock price has underperformed the market heavily, with the company recording a results deceleration due to the macro uncertainty harming the demand for IT products, and inflationary pressure on the opex. However, we believe that a profitability turnaround is close, as we see the first signs of an easing of the pressure on salaries, and we expect an efficiency boost from generative AI application. As a result, we expect a 2022-25E NI CAGR of 7%. Moreover, after the recently-concluded buyback, we believe that the material supply risk, which could have discouraged investors, is gone, to a large extent. We see Asseco’s valuation as attractive: on our forecasts, it is trading at 2023-24E P/Es of 11.9-11.3x, at 19% discounts vs. its peers.Asseco Poland is a provider of proprietary information technology ("IT") solutions which is based in Poland. Co. is engaged in provision of consulting on IT infrastructure, security solutions, human resources solutions, outsourcing services as well as fully comprehensive IT support. Co.'s profile includes software and computer hardware consultancy, production of software as well as supply of software and hardware. This category includes analysing, developing, and programming ready-to-use IT systems. In addition to IT services, Co. also sells goods including mainly computer hardware.
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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