Waberer’s International: Keep on trucking (BUY - initiation of coverage)
We initiate coverage of Waberer’s with a BUY rating and a 12M price target (PT) of HUF 6,200/share. Waberer’s is the largest asset-heavy transportation company in Europe, in terms of owned fleet. We like the company due mainly to its: 1) exposure to the rapidly-growing transportation market in the EU, as an effect of GDP recovery; 2) very high asset utilisation vs. its competition; 3) strong diversification between countries, segments and customers; and 4) business flexibility resulting from the utilisation of third-party trucks, as well as its own fleet, and fast vehicle rotation. We expect that, due to its strong competitive advantages, Waberer’s could grow faster than the market, and we forecast 2017-19E revenue and EBITDA CAGRs of 7% and 6% on a proforma basis, almost twice the forecast market growth. Also, we believe that Waberer’s may continue its strategy of growth through M&A and further consolidate the fragmented transportation market in CEE, due to its strong cash flow generation, as well as high realisable synergies (raising asset efficiency due to scale and lowering unit costs on the back of better negotiating power). Waberer’s looks cheap, in our view, trading at our 2018-19E EV/EBITDAs of 5.6x and 5.3x, which implies 19% and 11% discounts vs. its US asset-heavy peers. We do not see this discount as justified, due to its similar growth potential and lower tax rate.Waberer's International Nyrt, formerly Waberer's International Zrt, is a Hungary-based company engaged in the provision of the transportation services in the region of Central and Eastern Europe. The Company provides international road transportation, forwarding of LTL and groupage cargo, overseas and air transportation management, customs services, vehicle repair, second hand vehicle sales and logistics services. The Company operates also through subsidiaries, including Waberer's Logisztika Ltd that is charge of domestic transportation activities and operates with four divisions - gas, food, dry-cargo transportation and large truck operation, and H-Rapid service that operates within the dry-cargo division, delivering freight to its destination within 24 hours. Waberer's International Nyrt manages also subsidiaries in Romania, Poland and Slovakia as well as in the western region, in Spain and Germany.
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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