Play Communications: Guidance at risk (downgraded to HOLD)
We have downgraded our rating for Play Communications to HOLD from Buy, and cut our 12M price target (PT) to PLN 24.2, offering 10% upside potential. Despite Play’s recent weakness (-14% since the beginning of July), we see more negative newsflow coming in the short term. We expect Play’s negative EBITDA trend in 1Q18 to be maintained in 2Q18E: we forecast a 12% yoy adjusted EBITDA drop. Given this and the lack of strong factors that could change the 2H18E outlook, we believe that Play’s guidance on stable yoy EBITDA profitability might not be delivered. We also see a risk that Play’s new CEO could change the telco’s strategy, which could affect its dividend policy. Despite the risks and our revised forecasts (EBITDA cut by 8-10% in 2018-20E), we are HOLDers of Play as it trades at attractive FCF and dividend yields of 13% and 10%, respectively, and 8-11% discounts vs. its peers on our 2018-19E EV/EBITDAs.Play Communications SA Formerly known as Play Holdings 2 SARL. Play Communications SA, formerly Play Holdings 2 SARL, is a Luxembourg-based provider of financial investment services. The Company is the owner of mobile operator P4 Sp z o o, that provides a wide range of mobile telecommunications services, including voice, data transmission services, messaging, video service (PLAY NOW), as well as Value Added Services and sales of handsets and other devices, to individual and business subscribers in Poland.
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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