Purcari Wineries: Wine now, or whine later (BUY - initiation of coverage)
We initiate coverage of Purcari Wineries (WINE RO) with a BUY recommendation and a 12M price target (PT) of RON 27/share, implying 50% upside. Purcari is among the largest wine players in Romania and the largest exporter of wine from Moldova, with revenues of RON 142m in 2017. Its core market is Romania, accounting for 38% of sales in 9M18, where it is the dominant player in the premium segment, and the fastest growing winery. Going forward, we expect Purcari to deliver 2017-22E sales, adjusted EBITDA and earnings CAGRs of 13%, 16% and 19.5%, respectively. The company IPO-ed in February 2018, when its main shareholders sold a 49% stake, at a RON 19/share price; since then, it has been trading close to its IPO price. Compared to its international peers, Purcari trades at a 45.2% discount on our 2019E P/E of 9.2x and a 37% discount on our 2019E current EV/EBITDA of 6.9x; we believe these discounts are too high.
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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