Ekspress Grupp: taking profits after a stellar performance (downgraded to HOLD)
Since our most recent update on Ekspress Grupp, in December 2021, the company is up 20% (total return), outperforming both the TALSE index and the MSCI FM index. We have raised our 12M price target (PT) to EUR 1.82/share but, given the upside potential of just 7%, we have downgraded the stock to HOLD (from Buy). We like that it disposed of its low-margin printing business in 2021, which has strengthened its digitalised media-based business foundations; and that it is in the process of selling the loss-making Express Post. The combination of a soaring cost base (2.1ppt yoy EBITDA margin erosion on our 2022E figures), the weakening economic outlook (posing a threat to marketing revenues), and the increasing risk free rate, encourage us to take more cautious stance towards the company, however. We note also that the valuation does not seem to be cheap enough to command a BUY rating currently, on our 2022-24E EV/EBITDAs of 7.0-5.2x, implying a 15% premium/7% discount to its peers.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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