Petrol Group: Ready, steady… steady (BUY - initiation of coverage)
We initiate coverage of Petrol, a Slovenian fuel retailer, with a BUY recommendation and a EUR 386 price target (PT), offering 22% upside potential. We like Petrol due to: 1) its decent and foreseeable dividend (yield of 4%); 2) its slow but predictable growth (EBITDA CAGR of 4.6% for 2016E-20E); 3) additional upside potential for our valuation if management’s targets are achieved (EBITDA CAGR of 7.7% for 2016-20E); 4) the improving market environment and growth potential in the Western Balkans, which are underdeveloped in terms of automotive fuel and energy consumption; and 5) its attractive valuation, despite the stock being driven up by speculation in the past three months, after the announcement of the 3% stake sale by NLB, Slovenia’s largest bank. On our 2016-18E forecasts, Petrol trades at 8.1-9.3x P/Es and 6.5-7.5x EV/EBITDAs.
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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