Fourlis: All eyes on IKEA (stays BUY)
In this report, we reiterate our BUY recommendation on Fourlis, with a new 12M price target (PT) of EUR 7.50/share (from EUR 6.74), offering 34% upside potential. Despite the stock inching up by 26% in the past 12 months, we still see its current valuation as attractive, due to: i) further sovereign bond yield compression; and ii) a fundamental recovery of the Greek Ikea franchise. We believe that 2018E could finally be the year that the Greek home-furniture market starts growing again, after nine years of contraction. This, in our view, could unlock the operating leverage and margin expansion potential of the Greek IKEA franchise, and we pencil in a 6.5% EBITDA CAGR for the segment in 2016/21E. Additionally, we see its exposure to the volatile Turkish market as limited and we expect this to remain, due to halted rollout expansion of Intersport. Although the Greek market has rerated strongly, we still see Fourlis as a valuation call. On the 1YF EV/EBITDA consensus multiple, the stock is trading at 8.3x, implying a 19% discount to its long-term average; due to our expectations of a Greek furniture market recovery, we do not see this multiple as justified.Co. is engaged in the manufacture, import and distribution of electrical household appliances and the manufacture of FOURLIS kitchen hoods. In addition, through a subsidiary, Co. is engaged in the operation of a retail chain.
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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