CD Projekt: Good, better, Cyber (stays HOLD)
In this report, we present our updated forecasts for CD Project, which have led to a hike in our 12M price target (PT) to PLN 210 (from PLN 118). We remain HOLDers of the stock. 2019E is likely to see the peaks of both the hype on Cyberpunk 2077 (C2077), as we expect the company to share more insight on the pre-orders during the upcoming E3 fairs (early-summer), and marketing campaigns. We have decided to hike the number of copies sold in our current forecasts (16.6m copies in the year of release vs. 14.9 previously), as gamers appear to be eagerly awaiting C2077 (proved by the strong feedback for the gameplay revealed last autumn) and on the back of the strong reception received by Red Dead Redemption 2 (RDR2) recently, which illustrates that gamers still appreciate quality titles. On top of this, we factor in higher revenue per copy, on a combination of: i) a higher share of digital vs. physical distribution; ii) additional content; and ii) the FX rate. Volumes, especially digital volumes, are a key reason behind the hike in our forecasts.CD Projekt is a holding company of the CD PROJEKT Capital Group which conducts its operations in two activity segments: CD PROJEKT RED and GOG.com. CD PROJEKT RED's activities cover the creation and publication of videogames, licensing the associated distribution rights and manufacturing tie-in products which exploit the commercial appeal of brands owned by Co. The activities of GOG Ltd. involve digital distribution of videogames via Co.'s proprietary GOG.com distribution platform, on the basis of contracts signed by GOG Ltd. with producers, IPR holders and external publishers. The platform enables customers to purchase games, remit payment and download game files to their personal devices.
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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