Rainbow Tours: on the road to riches (BUY - initiation of coverage)
We initiate coverage of Rainbow Tours, a Polish tour operator, serving over 800k travellers annually, with a BUY and a price target (PT) of PLN 183. Rainbow recovered quickly from the COVID-19 slowdown, reaching PLN 4.1bn of revenues and PLN 282m of net income in 2024 (2.3x and 10x higher vs. 2019, respectively). Although we expect a results normalisation (2024-27E CAGRs of 12% and -6% in the revenue and net income, respectively), we see Rainbow’s valuation (2025-27E P/Es of 7-7.9x and EV/EBITDAs of 4.6-5.0x) as attractive, considering the long-term growth potential of the Polish tourism market. At the same time, we note the very strong balance sheet (PLN 194m in net cash in 2024), which should allow for both foreign expansion (the acquisitions of hotels in Greece and other tour operators in CEE) and dividend payments (we see 8.6-12.3% dividend yields in 2025-27E).Rainbow Tours SA. Rainbow Tours SA is a Poland-based tour operator. The Company provides a range of tour options, including city tours, long-distance airplane trips, package holidays, last minute and last second trips, to various destinations worldwide. In addition, it offers online flight ticket reservation services. The Company has 77 branch offices throughout Poland. Additionally, the Company designs information technology (IT) solutions for tourist industry. As of December 31, 2011, the Company operated sevens subsidiaries, Portal Turystyczny Sp. z o.o., Rainbour Tours Biuro Podrozy Sp. z o.o., Travelovo Sp. z o.o., Traveltech Sp. z o.o., ABC Swiat Podrozy Sp. z o.o., Bee&Free sp. z o.o. and TravelLab sp. z o.o. On December 4, 2012, the Company sold its entire stake in TravelTech Sp. z o.o.
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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