Baltic Classifieds Group: still structurally attractive (stays BUY)
We maintain our BUY on Baltic Classifieds Group (BCG), with a revised 12-month price target (PT) of GBp 351 (from GBp 386), representing upside potential of 17% from the current price. The Estonian market is proving to be tougher than expected. The new car tax continues to hold back demand, and the early signs of a recovery have stalled, which has had a negative impact on Auto 24’s revenues. Following this development, we have lowered our revenues and EBITDA estimates, but argue that the long-term structural story remains attractive. We believe that this development represents a case of postponed demand, with a recovery on the horizon. We continue to like BCG for its clear market-leading position, pricing power and network effects. Having the lowest marketing expenses among its global classifieds peers helps BCG to maintain the highest EBITDA margin globally. Taking these factors into account, we view the current share price correction as a buying opportunity. The company trades at a 27.3x FY27E P/E: a 2% discount to its global classified peers, on the consensus.
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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