Purcari Wineries: growth uninterrupted (stays BUY)

After a very abrupt correction after the start of the war in Ukraine in 2022, when Purcari Wineries’ (Purcari) share price lost almost half its value, the stock began to recover gradually from the beginning of 2023, with the share price delivering a 47% increase in value ytd. In the meantime, its wine sales performance was impressive, with the 2022 sales up 18% yoy, despite the loss of sales to Belarus, Russia and, partly, Ukraine. In 1H23, wine sales increased by an even more impressive 29% yoy. We expect wine sales growth to remain exciting in the following years, with a 2022-28E CAGR of 19%. We see the minimum in the EBITDA margins this year, at 26%, on a mix of a weak 2020 harvest, inflationary pressure and the recent acquisitions, but we expect the margin to rebound in the following years. Compared with its international peers, Purcari is trading at a 29% discount on our 2023E P/E of 9.8x and a 28% discount on our 2023E EV/EBITDA of 6.6x. We feel that these discounts are not justified, given its higher growth prospects, low level of indebtedness and better margins vs. its peers. We use a mix of a DCF and a peer multiples valuation, which yields a 12M price target (PT) of RON 17.8 (from RON 18.7), which offers 43% upside to the current price. We keep our BUY rating unchanged.