PKO BP: Structurally stronger (upgraded to BUY)
We have upgraded PKO BP to BUY (from Hold), as: i) the bank enjoys a discounted valuation (10% below the 5Y 12M FWD consensus average P/E ratio); ii) we see considerable consensus upgrades ahead (our 2019E net profit forecast of PLN 4.46bn sits 10% ahead of the consensus); and iii) we forecast almost an 8% dividend next year (and c.3.4% is still due in the coming months). We set our new 12M price target (PT) at PLN 45.1/share and we note that this excludes PLN 1.33/share of the 2018 net profit dividend, due at the end of July, offering 17% total return. PKO BP trades currently at our 2019-20E P/Es of 11.1-10.5x, visibly below its 5Y 12M FWD consensus average P/E of 13.0x.PKO Bank Polski is a universal commercial bank offering services to both domestic and foreign retail, corporate and other clients. Co. is licensed to hold foreign exchange and currencies and sell/buy them, as well as perform a full range of foreign exchange services; open and hold bank accounts abroad and to deposit foreign exchange in these accounts. In addition, Co. conducts activities relating to leasing, factoring, electronic settlements via payment cards, as well as renders other financial services. As of Dec 31 2009, Co. had total assets of Zl156,478,685,000 and total deposit of Zl124,628,562,000. Co. operates in the Republic of Poland, Ukraine and Sweden.
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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