Play Communications: Safe haven in tough times (upgraded to BUY)
We have upgraded our rating for Play Communications to BUY, from Sell, and increased our 12M price target (PT) to PLN 36.9/share, offering 40% upside potential. After its 25% ytd drop, Play has reached our previous PT; while, considering its strong FY19 results, positive guidance for 2020E, and the supportive 5G auction rules published by UKE, we see a strong foundation for our forecasts and valuation upgrade. Moreover, we appreciate Play as strong exposure to the improving Polish mobile market, and we see a potential trigger in the mobile network monetisation. We have raised our 2020E EBITDA and FCF forecasts by 5% and 20%, respectively, and cut our estimates on the cost of 5G frequencies from PLN 943m to PLN 500m. On our revised forecasts, Play trades at 5.1-5.0x 2020-21E EV/EBITDAs, a 8-7% premium vs. its peers, which is justified by the high FCF yield (13-15% in 2020-21E vs. its c.10-12% peers’ median) and growth outlook (a 2018-21E EBITDA CAGR of 8% vs. peers’ 6%).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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