Eurocash: Make the growth great again (stays BUY)
We maintain our BUY rating on Eurocash, reducing our price target (PT) to PLN 31.3 (from PLN 38.2) in this report. Over the past two years, Eurocash has continued to disappoint, with eroding EBITDA, as its wholesale growth potential neared its end and competitive pressure from retailers has mounted. As a result, the stock has derated to 9x 1YF EV/EBITDA, more than 20% below its long-term average. Going forward, Eurocash intends to return to growth by transforming Delikatesy Centrum into a supermarket chain similar to Dino in size (1.2k proprietary stores by 2023E), leveraging on its superior purchasing power and the experience of a new manager with a background at X5. According to the company’s plan, the retail segment should expand by 900 stores by 2023E, allowing retail revenues to almost double from PLN 7.4bn (pro forma) to PLN 13bn in 2023E. Taking a more conservative stance, we still expect the share of retail in total EBITDA to exceed one-third by 2022E, driving a consolidated 2017-22E adjusted EBITDA CAGR of 16%. In this light, we see the stock as attractively positioned in the risk-reward space.Eurocash, through its subsidiaries, is engaged in the distribution of food products, household chemicals, alcohol, and tobacco products (fast moving consumer goods). Through a range of distribution formats, Co. and its subsidiaries focus its business activities on the wholesale distribution to customers across the wholesale market segments, in particular, to stores throughout Poland such as retail stores, convenience stores at petrol stations, restaurants, hotels and cafeterias. Co. and its subsidiaries operate a range of distribution formats focused on supplying independent stores in Poland, which primarily include: Cash and Carry, Franchise Systems, and Distribution.
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.