Inter Cars: Value and growth (stays BUY)
We keep our BUY rating on Inter Cars and hike our 12M price target (PT) from PLN 580/share to PLN 635/share (39% upside), on the 23-29% hikes in our 2022-23E EBITDA forecasts. The company remains one of our top Polish picks, for several reasons. First, the shortage of microchips in 1H22E implies weak car production in 2022E and, as indicated by IHS’ latest forecasts, the analog semis bottleneck in late-2023E/early-2024E may sustain the strong demand for car parts for longer. Second, the stocks that are piling up at leading car parts producers (on our numbers, 3Q21 inventories/sales up to c.60%, near all-time highs) could allow the largest distributors (Inter Cars is the no.2 player in Europe) to negotiate better discounts, shielding their margins from material erosion, driven by cost inflation. Third, due to the above, we expect Inter Cars’ revenues and EBITDA to see double-digit yoy growth in 2022E (+24% yoy and +15% yoy, respectively), making it one of the fastest-growing car parts distributors worldwide (LKQ, its major European competitor, is expected to report flat yoy EBITDA, according to Bloomberg). Finally, Inter Cars is attractively priced, in our view, trading at our 2022-23E EV/EBITDAs of only 6.5-6.2x (36-32% below its long-term averages).Inter Cars is an automotive spare parts distributor for passenger cars, commercial vehicles and trucks in Middle-Eastern Europe. The product range of Co. reaches over one million different automotive spare parts for passenger cars and trucks. No matter if the car is European or Asian one, Co.'s customers can find full range of products for their cars as well as all the necessary tools and garage equipment. Besides spare parts distribution, which is the core business of Co., Co. is also an exclusive distributor of legendary motorcycle brand “TRIUMPH” in Poland (via motorcycle distribution network, called Inter Motors) and distributor of spare parts and accessories for other motorcycle brands.
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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