Kety: Strong stuff (40%+)… but we want more (stays BUY)
Since our last Buy call on Kety, in July 2020, the stock price is up 46% (total return) vs. 22% for the WIG index. We maintain our BUY rating on the stock and increase our 12M price target (PT) to PLN 794/share (31% upside), from PLN 534. The main drivers behind our higher PT are: i) the 1Q21 results (EBITDA 27% above our forecast and 8% above the preliminary figures); ii) Kety’s bullish 20201E forecast (all-time high EBITDA of PLN 694m); and iii) a record DPS proposal of c.PLN 45 (a c.8% dividend yield). Such a positive combination of newsflow has encouraged us to increase our 2021-22E EBITDA forecasts by 31-21%, respectively. Moreover, as we expect the leverage to stay at a moderate level (2021E net debt/EBITDA at 1.0x), we still see room for generous dividend payments in the coming years (2022-23E dividend yields at 6-8%). On our updated figures, Kety trades at our 2021E EV/EBITDA of only 8.8x, in line with its long-term average, which we see as very attractive.Grupa Kety is an aluminum industry company based in Poland. Co.'s operations are organized in three business segments: Aluminum Extrusions, Aluminum Architectural Systems and Flexible Packaging. Co. offers aluminum extrusions in different shapes, bars, tubes and wires of aluminum and its alloys, which are used in the construction & building, advertising, indoor fittings, transportation, automotive industry, white goods, machinery engineering and electrical engineering. Co.'s Aluminum Architectural Systems produces aluminum joinery, realizing investment projects and selling systems. Co.'s flexible packaging segment offers packaging made of aluminum foil, films and paper.
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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