reports
- Dmitry Vlasov
- Piotr Raciborski
- CFA
Elm: still a digital champion (stays HOLD)
We maintain our HOLD rating on Elm, with an updated 12M price target (PT) of SAR 995, which offers almost no additional upside (1%). We continue to view Elm as the digital champion in Saudi Arabia, and a key player behind the Saudi Vision 2030 digital initiatives. It trades at a 38.4x 2025E P/E, a 61% premium to its global IT peers. In our view, the premium is well deserved, thanks to the company’s superior growth and margins vs. its global IT peers, as well as its robust business model. Despite...
- Piotr Raciborski
- CFA
WOOD Flash – 4iG: 4Q23 results review – solid results, with 19% yoy pr...
Yesterday (29 February), after the market closed, 4iG reported its 4Q23 results, with solid yoy expansions in sales, to HUF 173bn (up 114% yoy, 5% above our estimate), and EBITDA, to HUF 50.0bn (up by 164% yoy, 3% below our estimate), and a net loss of HUF 15.9bn (vs. -HUF 11.7bn in 4Q22 and our PLN 16.8m net loss forecast). We see the results as neutral, despite the marginal miss vs. our EBITDA forecast. We note that the company is in the middle of a business transformation, which is causing a ...
- Dmitry Vlasov
- Piotr Raciborski
- CFA
Solutions by STC: M&A remain the main source of growth (stays HOLD)
We maintain our HOLD rating on Solutions by STC (Solutions), with an updated 12M price target (PT) of SAR 396, which offers 10% upside from current prices. We continue to like the company for its market-leading position and one-stop shop approach, but note that future growth will be highly dependant on prospective M&A deals, which also act as the main catalyst for a future rerating. Solutions trades currently at a 22.7x 2025E P/E, at a small discount of 3% to its global peers. Given the uninspir...
- Piotr Raciborski
- CFA
WOOD Flash – OTE: 4Q23 results review – solid quarter, with 2% yoy adj...
OTE has reported a solid set of 4Q23 results, with its sales up 5% yoy, to EUR 930m (3% above our forecast), and an adjusted EBITDA increase of 2% yoy, to EUR 360m (in line with our estimate). We see the results and the 2024E outlook as solid, and we appreciate the increase in the guided shareholders’ returns. We expect a positive market reaction.
- Atinc Ozkan
- Maria Mickiewicz
- Piotr Raciborski
- CFA
VIGO Photonics: PIC(k) tech, made in Poland (stays BUY)
We reiterate our BUY rating on VIGO Photonics and set our price target (PT) at PLN 593/share, implying 32% upside potential. In 2023, the company tackled the two main challenges (the reduced size of orders from Safran and supply chain issues) that harmed its results in the previous year, and recorded a results expansion, driven by strong demand for its military segment products, as well as the price hikes completed in 1Q23. From 2024E, we expect the growth to be driven by solid demand for both i...
- Dmitry Vlasov
- Piotr Raciborski
- CFA
Al Arabia Outdoor Advertising: exclusivity in a growing market (stays ...
We maintain our BUY on Al Arabia Outdoor Advertising (Al Arabia), with an updated 12M price target (PT) of SAR 304, which offers 18% upside. Since our previous update, in July 2023, the company’s share price has performed strongly, driven by winning a number of lucrative contracts, such as Riyadh and King Khalid International Airport. The Riyadh project is the major long-term revenue driver, in our view, which should also strengthen the company’s competitive position significantly locally. Al Ar...
- Miguel Dias
- Piotr Raciborski
- CFA
WOOD Flash – EME Strategy: OFEs' 2023 annual holdings
On 12 January, the Polish Pension Funds (OFEs) released their annual holding reports. OFEs’ equities allocation increased by c.3ppts, to 91%, due to the excellent performance of the equity markets in 2023. Poland was one of the top markets in 2023, with the Polish equities outperforming the MSCI World, increasing their weight in OFEs’ portfolios to c.82% of the total AUM, despite the heavier net flows into foreign equities.
- Atinc Ozkan
- Piotr Raciborski
- CFA
Orange Polska: safe dividend haven (stays BUY)
We reiterate our BUY rating on Orange Polska (OPL) and raise our 12-month price target (PT) to PLN 9.91/share, from PLN 8.00, implying 16% upside potential. Considering the solid Polish macro outlook, we prefer cyclical high-beta names, in general, but see OPL as a safe haven in the case of any downturn. It offers an attractive dividend yield (6-8% in 2023-25E) and the only pure exposure to the steadily-growing Polish telecoms market. Moreover, considering the organic growth outlook and the curr...
- Piotr Raciborski
- CFA
WOOD Flash – 4iG: 3Q23 results and takeaways from the call
Yesterday (30 November), after the close, 4iG reported its 3Q23 results. We see the outcome of the results and the conference call as neutral. We note that the qoq EBITDA drop was driven by a strong base, fuelled by a one-off gain on the sale of certain elements of DIGI HU’s mobile network: the net impact of one-off items on the 2Q23 EBITDA stood at HUF 14.0bn. The miss vs. our forecasts reflected primarily the differences in holding costs and other operating income results vs. our figures, as w...
- Atinc Ozkan
- Piotr Raciborski
- CFA
Magyar Telekom: fastest-growing EMEA telecom (stays BUY)
We reiterate our BUY rating on Magyar Telekom (MTELEKOM) and raise our price target (PT) to HUF 969/share (from HUF 546), implying 61% upside potential. We see MTELEKOM as an outstanding growth story in the telecoms space, with an expected 2022-25E EBITDA CAGR of 15%, the highest growth in EMEA, apart from Turkey, which is facing hyperinflation. In our view, the growth generated by MTELEKOM should be driven by: 1) CPI-linked price hikes; 2) customer base expansion; and 3) the abolition of the sp...
- Maria Mickiewicz
- Piotr Raciborski
- CFA
Ten Square Games: improved short-term outlook, but long-term challenge...
We maintain our HOLD rating on Ten Square Games (TEN). Our new 12M price target (PT) of PLN 100 offers limited 11% potential upside. We have cut our 2023-25E revenue forecasts by 21-31%, but our EBITDA changes are more limited, at 8-15%, to reflect the substantial cost optimisation undertaken this year, and TEN’s focus on its core titles. We assume the scaling up of Wings of Heroes only in 2025E (5% of our bookings forecast). While 3Q23 proved solid, we believe the increased volatility remains, ...
- Maria Mickiewicz
- Piotr Raciborski
- CFA
CD Projekt: solid long-term prospects, but a long way to go (upgraded ...
We have upgraded CD Projekt (CDR) to HOLD (from Sell), and increased our 12M price target (PT) by 25%, to PLN 120 (implying a limited 7% upside). Our increased forecasts reflect the better-than-expected performance of Phantom Liberty, which is supportive of Cyberpunk sales as well. Despite the sound short-term earnings momentum, we expect two gap years in 2024-25E, with no AAA game releases. The long-term outlook appears promising, based on the strong Witcher IP, the improved perception of the C...
- Piotr Raciborski
- CFA
WOOD Flash – OTE: 3Q23 results review – soft quarter, with 2% yoy adju...
OTE has reported a soft set of 3Q23 results, with sales down 3% yoy, to EUR 881m (in line with our forecast), and an adjusted EBITDA drop of 2% yoy, to EUR 370m (in line with our estimate). We see the results as neutral, as they were fully in line with our expectations on the top-line and adjusted EBITDA lines. The company has also reiterated its FY23E FCF guidance (with slight upside, in our view, due to the EUR 20m reduction in its 2023E adjusted capex guidance). We do not expect any major mar...
- Maria Mickiewicz
- Piotr Raciborski
- CFA
Asseco Poland: profitability rebound ahead (stays BUY)
We reiterate our BUY rating on Asseco Poland and cut our price target (PT) to PLN 103.0 (from PLN 112.3), implying 41% upside potential. Our PT is based on the weighted average of our DCF (implying a PT of PLN 97.0/share) and our comparative valuation (implying a PT of PLN 121.2/share). ACP’s stock price has underperformed the market heavily, with the company recording a results deceleration due to the macro uncertainty harming the demand for IT products, and inflationary pressure on the opex. H...
- Maria Mickiewicz
- Piotr Raciborski
- CFA
Huuuge Games: solid cash distribution potential (stays BUY)
We maintain our BUY on Huuuge Games (HUG), increasing our 12M price target (PT) by 30% to PLN 34.6, offering 33% potential upside. We revise our 2023-25E adj. EBITDAs upwards by 50-80% to reflect our expected profitability improvement, despite top-line pressure. Our new forecasts are 10-12% above consensus and result in a 2023E adj. EV/EBITDA of 3.1x, below the long-term average and implying a deeper discount to its peers than historically. While, we assume no medium-term earnings growth potenti...
- Piotr Raciborski
- CFA
WOOD Flash – 4iG: 2Q23 results review – solid results distorted by bus...
Yesterday (31 August), after the market closed, 4iG reported its 2Q23 results. The company reported a solid yoy expansion in sales, to HUF 151.1bn (up 107% yoy, 7% above our estimate), EBITDA, to HUF 59.0bn (up 265% yoy, 26% above our estimate), and net profit, to HUF 3.2bn (vs. our HUF 5.0bn net loss forecast). We see the outcome of the results as neutral, as the beat vs. our EBITDA and net profit forecasts was driven mainly by operating and financial one-offs related, in particular, to the sal...
- Atinc Ozkan
- Piotr Raciborski
- CFA
Cyfrowy Polsat: costly diversified business (stays HOLD)
We reiterate our HOLD rating on Cyfrowy Polsat (CPS) and cut our price target (PT) to PLN 15.42/share (from PLN 35), implying 10% upside potential from the current share price. Despite the strong share price deterioration (-25% LTM), we are HOLDers of CPS, considering its still uninspiring multiple valuation and upcoming energy-related capex cycle causing high holding structure complexity, high leverage and no dividend payouts until 2026E, on our assumptions, paired with a marginally positive im...
- Dmitry Vlasov
- Piotr Raciborski
- CFA
Elm: digital enabler (HOLD - initiation of coverage)
We initiate coverage of Elm with a HOLD rating and a SAR 712 price target (PT), which offers just 4% upside from the current price. The company operates in the Saudi IT sector, with a focus on developing digital products and services, by partnering with ministries and other public entities. It trades at a 32.7x 2024E P/E, a 62% premium to its global IT peers. In our view, the premium is well deserved, thanks to the company’s superior growth and margins vs. its global IT peers, as well as its rob...
- Piotr Raciborski
- CFA
WOOD Flash – Telecom Egypt: 2Q23 results review – EBITDA up 30% yoy, 7...
Today (14 August), Telecom Egypt (ETEL) reported solid 2Q23 results, with its revenues growing 29% yoy, to EGP 14.18bn (in line with our estimate and 7% above the consensus), its EBITDA up 30% yoy, to EGP 5.82bn (4% below our estimates, 7% above the consensus), and net profit of EGP 2.88bn (up 19% yoy, in line with our estimate, but 10% above the consensus). We see the results as slightly positive, due to the beat on all the major lines vs. the consensus.
- Piotr Raciborski
- CFA
WOOD Flash – OTE: 2Q23 results review – soft quarter, with 1% yoy adju...
OTE has reported soft set of 2Q23 results, with sales up 1% yoy, to EUR 854m (in line with our forecast), and an adjusted EBITDA drop of 1% yoy, to EUR 349m (in line with our estimate). We see the results as neutral, as they came in fully in line with our expectations on the top line and the adjusted EBITDA. The company has also reiterated its FY23E guidance. We do not expect a major market reaction.
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