Cyfrowy Polsat: Network monetisation ahead (upgraded to BUY)
We have upgraded our rating on Cyfrowy Polsat (CPS) to BUY, from Hold, and increased our price target (PT) to PLN 30.6/share (from PLN 30.5/share), implying 19% upside potential from the current share price. CPS’ valuation vs. its peers does not seem especially attractive, in our view, as the company trades at 2020-21E EV/EBITDAs of 6.9-6.5x, 27-31% premiums vs. its peers (vs. its two-year average of 28%), on our forecasts. However, we appreciate CPS’ long-term FCF generation potential: we expect CPS’ adjusted FCF to grow from PLN 1.34bn in 2020E to PLN 1.67-1.74bn in 2021-22E (implying 10-11% FCF yields), driven by EBITDA expansion (a 2% 2019-22E CAGR) and dropping net finance costs, supporting the bottom line (a NI 2019-22E CAGR of 13%). Moreover, we believe that Cyfrowy Polsat is currently the best exposure to the trend of infrastructure monetisation in Poland, and that finding investors for its TowerCo would mean massive value unlocking and would be a very strong trigger for the equity story. Considering the pace of the process, we believe it might be matter of months for it to be concluded.
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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