WOOD Flash – Kety: strategy 2021-25 – very ambitious financial targets

Yesterday (16 December), Kety released its 2021-25 strategy, 2021E forecasts and 4Q20 preliminary results.
We see the targets outlined in the 2021-25E strategy as very promising. First, we note that the company expects its segments to double the growth rates of their respective markets, and the 2025E figures offer material upside for our forecasts (20%+ higher profits). Second, the company is pencilling in the dividends to be paid out over the period at PLN 1.7bn (i.e., c. 40% of its current market capitalisation), in line with our assumptions. However, the 2025E net debt/EBITDA ratio should land at only 0.8x, which we believe offers room for more generous profit distributions in the coming years. We also note that Kety has always been conservative in its guidance (the 2020E EBITDA target from its previous strategy is likely to be exceeded by c.28%, based on Kety’s 2020E forecasts). This leads us to believe that there may still be upside potential for both the profits and dividend forecasts outlined in the strategy. Third, we appreciate that the company has also declared its ESG targets, which we believe are an immensely important part of the development plans.