Ciech: BUY on strong soda market (upgrade to BUY – transfer of coverage)
Due to changes in analyst responsibilities, we transfer coverage of Ciech with BUY rating and trim our price target (PT) from PLN 73.0 to PLN 70.0/share implying 19% upside potential. We like Ciech, due to the strong soda market (7% price growth according to global information provider IHS Markit, vs. 5% consensus in January 2019), which should result in, we assume, high utilisation rates in Ciech’s soda plants. We also appreciate the greater diversification of revenues through: a) the launch of new production capacity (+450kt/+75%) in the evaporated salt business in 2020E; and b) development of the organic segment, mainly in the agricultural (agri) business, (the acquisition of Proplan and doubling the number of crop protection products between 2017-20E). We also note that, amid its high cash generation capacity, Ciech’s adj. ND/EBITDA should drop from 2.0x in 2018E to 1.3x in 2021E, leaving comfortable room for dividend payments. We conservatively assume a dividend payout ratio of 30%, implying 2-4% 2019-21E dividend yields, and note the upside risk to our forecasts. Ciech trades at our adj. 2019-20E P/E multiples of 7.8-7.5x (33-29% discounts to its peers), and adj. EV/EBITDA of 5.3-5.0x (27-23% discounts).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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.