Polish Retailers: Out of the wood(s), towards the new normal (reinitiating on CCC with a BUY; LPP stays HOLD)
We maintain our preference for CCC over LPP, reinitiating our coverage with a BUY for CCC and a new price target (PT) of PLN 88. We maintain our HOLD on LPP, with a new PT of PLN 7,640 (down from PLN 8,078). While we saw CCC as positioned worse when the COVID-19 related turmoil began, we now see the company as the winner of the new reality. First, the PLN 507m capital increase has covered the liquidity gap. Secondly, we believe that the crisis situation has pushed CCC into a more energetic restructuring of its underperforming DACH operations and costs rationalisation. Thirdly, CCC has outperformed its local peers so far in cashing in on state aid. Finally, we see CCC as better-positioned for two major consumer trends: i) migration to the internet; and ii) trading down to the economy segment. On top of this, we actually see CCC benefiting from LPP’s aggressive negotiation strategy vs. the landlords. In light of our 2020-22E EBITDA CAGR of 84% for CCC vs. 33% for LPP, we view their close valuation as unjustified.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.
LPP SA Gdansk is clothing manufacturing group based in Poland. Co. is engaged in the design and distribution of clothing. Co.'s headquarters is located in Gdan'sk, including designing resources for all its brands. Co.'s stores offer its customer products that include jackets, shirts, sweaters, dresses, skirts, trousers, jeans, underwear and garment products. Co. also sells promotion clothing under a special selected brand. Co.'s product offering is addressed to a variety of customers for whom separate brands and chain stores are set up. Co. launches clothing under such brand names as: RESERVED, CROPP, MOHITO, HOUSE, and PROMOSTARS.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.