Sarantis: STR8 CEE-based growth story (BUY - transfer of coverage)
Due to a change in analyst responsibilities, we transfer coverage of Sarantis, reiterating our BUY rating on the stock, with our 12M price target (PT) upped to EUR 13.0/share, from EUR 8.2/share. We see Sarantis as a perfect play on the expansion of the CEE consumer staples sector, without facing the direct headwind of the price war on the Polish grocery market. Following decades of international expansion, CEE reached c.70% of the company’s 2023PF sales and EBIT, with Poland becoming the largest sales contributor (a 34% share). In March 2024, the company’s new management issued its 2023-28E guidance, implying solid growth, at CAGRs of 9% in sales, 14% in EBITDA and 17% in FCF. Given Sarantis’ extensive M&A track record, we would expect further acquisitions to provide an added boost. Across this, Sarantis is trading at our P/Es of 15.9x for 2024E and 14.1x for 2025E, broadly in line with the average of the Polish grocers, but 28-27% below its Western peers’ median, which we see as offering an attractive entry point, even after the 33% share price growth witnessed ytd.Co. is a consumer goods manufacturer and distributor engaged in operations in Greece. Co. produces consumer goods such as cosmetics, pharmaceuticals, households, pet products, car's accessories and apparel. Co. produces its own brand name of cosmetic products such as Prosar, Str8, BU99, Clochard, Carroten, Tokalon and others. Co.'s product portfolio also includes a range of international brands such as Estee Lauder, Clinique, Aramis, Donna Karen, Orlane, Montana Versace and 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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