PCF Group: Set for expansion (BUY - initiation of coverage)
We initiate coverage of PCF Group (PCF) with a BUY recommendation and a 12M price target (PT) of PLN 64.8, offering 17% upside. Being one of the most experienced Polish AAA game developers, PCF offers an attractive, stable business model, focused on cooperation with global publishers (work for hire (WFH)), characterised by payments from the publisher throughout the whole development cycle. We forecast a strong 2020-23E EBITDA CAGR of 52%, driven mostly by the top line, noting that 88% and 78% of our 2022-23E revenue expectations, respectively, should come from already-secured WFH contracts (Gemini, Dagger and, to a smaller extent, Outriders). On our average 2022-23E P/E, PCF is trading at a slight 8% premium to its global peers, justified by its long-term potential, related to the already-launched self-publishing activity (SP; we assume the first bigger SP release in 2025E), 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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