Ceska zbrojovka Group: Bang, bang (upgraded to BUY)
Following a robust 1Q21 and the closing of the Colt acquisition, we upgrade Ceska zbrojovka Group (CZG) to BUY (from Hold), with a new price target (PT) of CZK 528/share. Management now guides for FY21E sales of CZK 10.34-10.64bn and EBITDA of CZK 1.99-2.19bn, and we raise our 2021-23E sales/EBITDA forecasts by 40-82%. The USD 222m Colt deal accelerates CZG’s plans for the penetration of the US civilian and military & law enforcement (M&LE) markets (70% of Colt’s sales in 2020) and resolves its capacity issues in North America. On our 2021E updated forecasts, CZG is trading at 9.0x EV/EBITDA, which is at premium to the firearms peer multiple of 5.6x. In 2022E, once Colt is consolidated for the full year, our EV/EBITDA estimate drops to 6.6x, which is closer to the Bloomberg estimate for the peer group.
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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