Famur: Beating expectations, keeping promises (stays BUY)
We keep our BUY rating on Famur, with a new 12M price target (PT) of PLN 6.33/share (plus a DPS of PLN 0.53), offering 31% upside. We like the company for the attractive combination of: i) high dividend yields (6-7%); ii) low and still dropping leverage (ND/EBITDA down from 0.6x in 2018 to 0.2x in 2021E); iii) long-term structural factors supporting its profitability (leading position in its key markets, increasing the share of high-margin aftermarket services, the disposal of PBSz); and iv) potential inflows from the Employee Capital Plans (ECP/ PPK). On our adjusted 2019E P/E of 12.1x and 2019E EV/EBITDA of 5.9x, Famur trades well below its long-term averages (discounts of 40% and 11%, respectively). However, we believe that Famur deserves to trade at higher multiples vs. its historical ones, due to the structural changes in the equity story (the acquisition of Kopex, its declared dividend policy, and the increasing high-margin aftermarket services revenues).FAMUR SA is a Poland-based manufacturer of mining equipment and machinery. The main area of the Company's operations is manufacture of automated longwall systems enabling the exploitation of coal. The Company also specializes in design and production of equipment for underground mines and open pits, as well as bulk material handling equipment and machines for coal preparation plants. The Company's products portfolio includes electric and hydraulic shearers, roof support, hydraulic control system, conveyors and crushers. FAMUR SA is also engaged in the development of information technology solutions and management system for coal industry. The Company operates through subsidiaries, based in Poland, Germany and the Russian Federation. The Company's major shareholder was TDJ SA, with a stake 71.28%. On November 27, 2014 the Company acquired 76,69% of stake in FAMAK SA.
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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