Warsaw Stock Exchange: Volumes are strong, IPOs are coming (upgraded to BUY)
We have upgraded Warsaw Stock Exchange (GPW) from Hold to BUY, with a new price target (PT) of PLN 47.4/share (17% upside). First, the ytd volumes have proved our previous assumptions too conservative (we have increased our volumes growth assumption by 6ppts). Second, the retail investors’ activity (a 10-year high share in the stocks trading in 1H20) should improve the effective fee charged by GPW. Third, we have found out recently about potential, large IPOs coming to the Polish stock market, including the planned, largest-ever placement – Allegro. We believe that the entrance of this high-tech company could attract new investors to the stock market, and boost the volumes further. Fourth, we see GPW as the safest dividend story among the Polish financials (a c.6% yield, on our estimates), which can also benefit from higher volatility on the markets, should the epidemic affect the economy adversely. Finally, given the material change in the outlook for GPW, we do not see its current valuation as demanding: GPW trades at our 2020E P/E of 12.9x, i.e., close to its 12.6x 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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