Report
Lukasz Wachelko, CFA ...
  • Maria Mickiewicz

CCC: too fast, too furious (stays BUY)

We maintain our BUY rating on CCC, with a new 12M price target (PT) of PLN 59 (from PLN 88). CCC’s top line has emerged from the COVID-19 crisis stronger than we expected. However, before we saw that CCC was fully recovered, its management initiated its ambitious GO.25 strategy, aiming at more than tripling revenues by 2025E. In the short term, start-up costs have diluted the company’s margins, which have kept the balance sheet under pressure, when combined with the re-accelerating capex. Our estimate of net exposure/EBITDA of 6.9x at end-2022E implies that CCC needs to reinforce its balance sheet with a c.PLN 510m injection. In our view, these headwinds are keeping CCC cheap, at our EV/EBITDAs of 7.6x for 2022E and 6.5x for 2023E, both double-digit discounts vs. its peers. Importantly, we believe that CCC may be able to cover the liquidity gap with the long-awaited IPO of Modivo Group.
Underlying
CCC SA

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.

Provider
Wood and Company
Wood and Company

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.

Analysts
Lukasz Wachelko, CFA

Maria Mickiewicz

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