Ciech: bumpy road, but got there finally (stays BUY)
Since our previous update on Ciech, the stock is up by 53%, vs. +25% for the WIG index. However, we still keep our BUY rating on the stock, and raise our 12-month price target (PT) from PLN 37.7 to PLN 58.0/share (33% upside). Our key reasons for our valuation hike are: i) the structurally stronger global soda ash market, which should support Ciech’s soda segment’s results in the mid-term; ii) the turnaround in Ciech’s agro business (segment’s EBITDA up by 3x yoy in 2021); and iii) its improved FCF generation capacity (we expect 2022-24E FCF yields of 8-13%). Moreover, the capital increase to be voted on during the upcoming AGM (28 April), if approved, may facilitate M&A, creating upside for our forecasts. Finally, we note that we see Ciech’s current valuation as attractive: the stock is trading at our 2022-24E EV/EBITDAs of 4.1-3.5x, implying 25-34% discounts to its long-term averages.Ciech is engaged in the production, trade and distribution of chemicals as well as comprehensive service activities directed at the domestic and foreign market. The main products sold by Co. are soda ash, TDI, plastics, resins, chemical fertilizers, plant protection chemicals, glass blocks and glass packaging, salt and other chemicals.
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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