CCC: Transition time (downgraded to HOLD)
We have downgraded CCC to HOLD (from Buy), with a new 12M price target (PT) of PLN 173 (down from PLN 345). Despite the initial management declarations of a quick recovery from the one-off troubled 2018, we see 2019E as another transitory year from hard discounter to mass market player. In the short term, we expect the soft 1Q numbers to be followed with weather-affected April and May sales. While we see CCC as well-positioned to deliver on its long-term strategy, we expect the recovery to be back-loaded, with a lack of short-term positive triggers. Cutting our earnings forecasts for the name by c.40% over 2019-21E, we have halved our PT and see the double-digit discounts vs. its Western peers as justified by the limited visibility.CCC is engaged in the wholesale and retail trade of clothing and footwear. Co. offers its products to wide range of consumers, from demanding clientele of trendy boutiques to value-oriented medium segment customers, to less wealthy customers seeking reasonably priced quality footwear. Co. pursues a strategy of brand diversification, which is reflected in its three autonomous distribution channels: a chain of official CCC stores, BOTI footwear shops and QUAZI boutiques. Co. offers more than 2,500 designs of footwear. Co. also owns more than 67 proprietary brand names e.g. Lasocki.
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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