Ekspress Grupp: Good news priced in already (stays HOLD)
We keep our HOLD rating on Ekspress Grupp, but increase our 12M price target (PT) from EUR 0.68/share to EUR 0.98 (6% upside potential). We believe that the +15% ytd stock price rally already reflects the possible positive change in the market environment that could support the company’s business. Among the most important developments for the company, we see: i) a recovery of the GDP in the Baltics in 2021E, which should facilitate greater advertising revenues; ii) dynamic growth in the digital subscriptions reported by the company (+74% yoy in 1Q21 in total in the Baltics); and iii) the possible lifting of the COVID-19 related restrictions in Latvia, which could support the group’s online ticketing business. This has encouraged us to increase our 2021-22E EBITDA forecasts by 22-20%, respectively. We are still concerned, however, that the potential spike in costs (raw materials) in the company’s printing business could erode its profitability. Moreover, our DCF analysis does not indicate a valuation level that is an attractive enough for a BUY rating (a 12M PT of EUR 0.87/share, offering 5% downside potential).Ekspress Grupp AS is an Estonia-based company that is principally engaged in the printing and publishing sector. The Company operates through three segments: Online media, Periodicals and Printing services. The Online media segment provides the administration of online classified portals and intermediation of Internet advertising services. The Periodicals segment is engaged in the publishing of newspaper, magazines, custom publications and books in Estonia and Lithuania. The Printing services segment provides printing and related services. It is active through its subsidiaries, joint ventures and associated companies, including UAB Ekspress Leidyba, UAB Adnet media, AS Express Post, AS Linnaleht and OU Hea Lugu, among others. The Company is active in Estonia, Latvia, Lithuania, the Russian Federation and Finland, among others.
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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