CCC: it’s just a flesh wound (stays BUY)
We maintain our BUY on CCC, with our 12M price target (PT) unchanged at PLN 59. In line with our expectations, CCC has managed to cover its PLN 500m capital shortfall with a SPO, backed partially by the founder’s money. Having taken the toughest step already, we expect CCC to continue deleveraging, with its refinancing efforts allowing it to reduce its leverage below 3.5x at end-2023E and halve its costs of financing in 2024E. With its balance sheet back under control again, we believe that CCC may re-focus on its operations, which is reflected in management’s bullish guidance for 2023E, with 12-21% yoy sales growth and a 91-48% yoy EBITDA recovery. Conservatively assuming FY23E EBITDA of PLN 951m, 7% below the lower bound of the guidance, we see the stock trading at this year’s EV/EBITDA of 6.9x, implying 18-48% discounts vs. its peers. Once the going-concern worries are out of the picture, we would see such a deep discount as no longer justified. As the key triggers for the share price, we see: i) a margins recovery, led by easing costs pressure beyond 1Q23; ii) successful refinancing efforts; and iii) the regained availability of the material reverse factoring limits.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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