Famur: Going GLOBAL from Polish stronghold (BUY - initiation of coverage)
We initiate coverage of Famur with a BUY recommendation and a 12M price target (PT) of PLN 6.50/share, implying 21% upside potential. The company produces equipment used in underground and open pit coal mining, logistics, energy plants, and electrical equipment used in mining machinery, and it also renders mining services. In 2017, Famur acquired its local competitor, Kopex, which boosted its market share in Poland in its core products segments to c.70%. After strengthening its position in the domestic market, it intends to follow the GO GLOBAL strategy, i.e., increasing the export contribution to its top line to 50% in 2022E, up from 38% in 2017. Although the company has no stated dividend policy, if there are no M&A/significant investment, we believe that Famur may start paying regular dividends (we assume the dividend payout ratio at 75%), which would imply 2018-20E dividend yields of 4-7%, i.e., double its peers. Famur trades at our 2018-20E adjusted P/Es (excluding the profit from PBSz’s sales), at 11.4-18.0x, 5-33% premiums vs. its peers, and 5.8-7.4x on our 2018-20E EV/EBITDAs (8-16% discounts vs. its peers).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.
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