4Q16 – 5% miss on net income on lower net other operating result
Warsaw Stock Exchange (GPW) has posted PLN 33m (-18% qoq, +17% yoy) of net profit for 4Q16, 5% below our estimate, but 1% above the market consensus. The revenues from GPW's commodity arm were above our expectations, due to higher proceeds from clearing services and trading in gas and property rights of origin. On the other hand, the effective tax rate was higher than we expected (21% in 4Q16, vs. our assumption of 17%), and the net other operating income was negative (-PLN 2.6m vs. our assumption of PLN 0). Overall, we read the results as solid (an EBITDA margin of 58% and a C/I of 46% for 4Q16), driven by strong financial markets, but broadly in line with the market’s expectations. We are waiting for management’s dividend distribution declaration, but this may take a while. Furthermore, management has indicated that the Supervisory Board halted works on the updating of the company’s strategy in January. Consequently, there is a risk that KDPW might not be acquired by GPW. In our view, this acquisition could increase the EPS for the shareholders in the longer term.Gielda Papierow Wartosciowych w Warszawie SA (Warsaw Stock Exchange, GPW) is a Poland-based stock exchange. It is a parent entity of WSE Group that offers products and services within its trading markets of equity, derivate, fixed income and structured products. It also distributes market data. The Company has two business lines: Financial market, which includes trading in equities, derivatives, fixed-income and other instruments, listing, and information services; and Commodity market, which includes trading in electricity and property rights in certificates of origin, operation of a register of certificates of origin, clearing, trade and technical trade operator services. As of December 31, 2011, it operates two wholly owned subsidiaries, WSEInfoEngine SA, providing data transmission and information services; and Instytut Rynku Kapitalowego WSE Research SA, engaged in publishing; as well as 92.47%-owned BondSpot SA.
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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