Bittnet Systems: High growth for a high price (HOLD - transfer of coverage)
We transfer coverage of Bittnet Systems (BNET) and rate it a HOLD, with our price target (PT) cut to RON 0.79/share (from RON 0.973), implying 9% upside potential. Since our Buy call on BNET in October 2020, its market cap has appreciated by 28%; despite this, we still appreciate the company’s growth potential (we expect a 61% 2020-23E EBITDA CAGR), but we see no room for a short-term, rapid share price appreciation. On our estimates, BNET trades at 2021-22E EV/EBITDAs of 12.1-8.2x, at 43-7% premiums vs. its peers, and P/Es of 22.2-13.0x, at a 42% premium and a 10% discount vs. its peers. We note that, as the company missed our 2020 forecasts (EBITDA 38% below our expectations), we have turned more conservative: now, our 2021E EBITDA and gross profit estimates are 14% and 12% below BNET’s budget.
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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