4Q16 results – PLN 1.9bn net loss mainly on goodwill impairment, no dividend in 2017E
OPL’s 4Q16 operating results were broadly in line with our estimates, and we see them as neutral: EBITDA came in 0.6% below our forecast. However, there are three factors that justify a strong, negative market reaction, in our view: 1) management’s recommendation of no dividend payout in 2017E; 2) the 2017E guidance EBITDA of PLN 2.8-3.0bn and net debt/EBITDA of up to 2.6x, which we believe may be surprising for the market; and 3) the huge net loss of PLN 1.9bn, caused by the goodwill impairment of PLN 1.79bn. We also point out management’s significant uncertainty over the results outlook (management said during the conference call that it will review its mid-term guidance and announce it to the market along with the 2Q17E results) and dividend outlook (the CFO stated that it is not excluded that OPL will not pay a dividend for more than one year) – we believe that OPL’s share price may remain under pressure in the mid-term. Also, our doubts concerning the sustainability of FTTH customer acquisition acceleration have proved somewhat justified – the CEO stated that FTTH customer inflows in 1Q17E are likely to be lower than in 4Q16. We maintain our SELL rating on Orange Polska.Orange Polska SA is a supplier of telecommunications services in Poland. Co. provides services, including fixed-line telecommunication services, Integrated Services Digital Network, voice mail, dial-up and fixed access to the Internet and Voice over Internet Protocol. Co. is one of Poland's three DCS 1800 and GSM 900 mobile telecommunications providers. Co. provides also third generation UMTS services. In addition, Co. provides leased lines, radio-communications and other telecommunications value added services, sells telecommunications equipment, produces electronic phone cards and provides data transmission, telephone directories, multimedia services and various Internet services.
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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