Warsaw Stock Exchange: Expecting dividends and high opex (stays HOLD)
We keep our HOLD rating on Warsaw Stock Exchange (GPW), with a new price target (PT) of PLN 43.2/share (9% upside). First, we note that GPW is the only Polish financial name that intends to pay a dividend in 2020E (a DPS of PLN 2.4, in line with our forecasts and its financial targets). Second, we like GPW’s plan to add new business lines to help to diversify its top line in favour of non-stocks trading sources of revenue. Should these plans prove successful, GPW could trade at higher valuation multiples in the future, in our view. On the other hand, we note that the effects of the implemented initiatives may not be visible in the short term, and their high costs (C/I at 56-59% in 2020E and 2021E, on our numbers) may result in stagnant EPS (2019-22E CAGR at only 2% vs. 7% for the peer group). On top of this, we note that GPW does not seem cheap at this stage (at our 2020E P/E of 13.5x, it trades 5% above its long-term average).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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