Kcell: Valuation still demanding vs. peers (stays SELL)
In this report, we update our view on Kcell and reiterate our SELL rating, with our price target (PT) lifted to KZT 2,231/share (from KZT 1,485/share), implying 12% downside potential. We appreciate Kcell’s growth outlook (a 12% 2020-23E adjusted EBITDA CAGR), driven by ARPU expansion mainly, and we expect the dividend yields it offers to catch up with its peers by 2023E. However, we reiterate our SELL rating, as we still see Kcell as relatively expensive vs. its peers: Kcell trades at 32-17% premiums on our 2021-22E EV/EBITDAs. During the past 12M, Kcell has delivered a 1.3% total return, but underperformed the KZKAK index by 53.9ppts. We believe it might lag the market going forward: Kcell is not the best exposure for the widely-expected post-pandemic economic rebound, in our view.
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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