Bank of Georgia/Georgia Capital: Two stocks post-demerger, two BUYing opportunities (BGEO stays BUY; initiating on CGEO with a BUY)
Following the successful demerger of Bank of Georgia Group, we maintain our BUY recommendation on Bank of Georgia (BGEO), with an updated price target (PT) of GBP 24.8/share, and initiate formal coverage of Georgia Capital (CGEO), with a BUY rating and a 12M sum-of-the-parts (SOTP) PT of GBP 19.9/share, or upside of 102%. At current levels, we see BGEO as attractively valued, with 35% upside, on 7.7x P/E and 1.76x P/TBV for 2018E. The bank is trading at 13% P/E and a 24% P/TBV premium vs. TBC in 2018E, which can be explained largely by the different levels of profitability at these banks (our terminal return on tangible equity (ROTE) for BGEO and TBC are at 22% and 20.5%, respectively).
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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