Benefit Systems: A year to regain condition (BUY - transfer of coverage)
We transfer coverage of Benefit Systems (BFT), keeping our BUY rating and setting our 12M price target (PT) at PLN 1,030 (down from PLN 1,171), offering 20% upside. In the short term, we see BFT as one of the key victims of COVID-19. We expect 2021E to be, effectively, another “lost year”, due to the January lockdowns and the low visibility on the timing of potential reopenings. We believe the long-term fundamentals should remain solid, however, allowing for a smooth recovery in sports cards after the softening of the restrictions (proven in Poland in 3Q20 already). We forecast the 2022E EBITDA to be 7% above the pre-pandemic 2019 level. We underline BFT’s cash-generative business model, its limited capex needs over the next two years (given the sufficient number of gyms until the card base recovers) and our manageable net debt/EBITDA ratio forecast of 1.5x end-2020E (non-IFRS 16) declining going forward. We expect BFT to turn net cash positive by end-2022E, which should allow for the reinstatement of dividends (in line with BFT’s 2020-23E policy of at least a 50% payout) and/or growth reacceleration. BFT is now trading at slight discounts vs. its peers on our 2022E P/E ratio.Benefit System SA is a Poland-based company engaged in providing work benefits in the area of sport, recreations, culture and entertainment for employers. Its products portfolio includes MultiSport Plus card, program that allows access to the sport and recreation clubs and multi-purpose facilities; MultiBet, providing access to more than 90 cinemas through Poland; and cafeteria programs, which allow employees to select items from such segments as sport, recreation, culture, entertainment, tourism and health and beauty. The Company is a parent entity of a capital group, which includes subsidiaries, such as MyBenefit Sp z o o, FitSport Polska Sp z o o, Vanity Style Sp z o o and Multisport Benefit sro, based in the Czech Republic.
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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