Ceska zbrojovka Group: Locked and loaded for growth (HOLD - initiation of coverage)
We initiate coverage of Ceska zbrojovka Group (CZG) with a HOLD rating and a CZK 316/share price target (PT). Based in the Czech Republic, CZG is one of the leading European firearms producers, with more than 80 years of experience. Following its takeover in 2001 by the current majority shareholder, the company expanded its operations globally, and returned to the military/law enforcement (MLE) market in 2011. Accounting for more than half of total sales, the US market is key for CZG’s success. With its planned USD 60-70m investment in the new plant in Arkansas, CZG should be able to expand its footprint in the civilian market, while also qualifying for tenders with US MLE customers. On our numbers, CZG trades at a 2021E EV/EBITDA of 6.3x and an 11.1x P/E, implying a 22% discount and a 1% premium vs. its peers, respectively, but broadly in line with its closest peer – Sturm Ruger.
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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