reports
- Konrad Ksiezopolski
Polish Telecoms: Subscription model rules
The outbreak of the Coronavirus has forced many countries to take unprecedented steps like keeping people at home for two weeks or more. Such a widespread halt of human, consumer and business activity will obviously have a negative impact on economies and companies but due to the uniqueness of the situation and the uncertainty of where and how long it will go on, it is also very hard to predict the scale of impact on companies’ P&Ls. Polish telcos are one of the sectors that have experienced a...
- Konrad Ksiezopolski
Asseco Poland: Trust is good but control is better
We keep ACP as a NEUTRAL but lift our FV to PLN 63.2 (from PLN 59.9) as we have added potential synergies from close co-operation with CPS (CPS PW, BUY, PLN 28.5, FV PLN 32) as we expect the tender to end successfully. In our view, the main rationale of the deal for CPS is control of a trusted external IT provider that would predominantly focus on finishing the billing system. The protracted billing contract with Huawei and finally its cancellation was in our view the main reason why CPS approac...
- Konrad Ksiezopolski
Cyfrowy Polsat: Good KPI momentum
We keep CPS at a BUY and lift our FV to PLN 32 (from PLN 29) on the back of positive KPI and an announced price lift, which should have positive effect on its ARPU and EBITDA in the long term. Thus, we lifted our 20E/21E EBITDA forecasts by 3%/3%. CPS’ long-term fundamental investment story is still the most attractive among the Polish telcos we cover thanks to CPS’ attractive services value chain. CPS’ story remains unchanged with a focus on product bundling through flagship product Smart...
- Konrad Ksiezopolski
Play Communications: PLAYing smart
We keep Play at a BUY and lift our FV to PLN 37.9 (from PLN 32.5) as a result of 19E/20E/21E EBITDA upgrades of 2%/3%/5%, respectively, coming from very good 3Q19 results which showed the first sign of an ARPU increase (in our view currently the biggest value and EBITDA creator among all Polish telcos). Play has also upgraded its 2019 guidance on EBITDA and FCFE. In our view, no overstaffing and not being an ineffective organisation (like Orange Polska), lack of expensive TV content costs and ex...
- Konrad Ksiezopolski
Orange Polska: A turnaround...but it's crawling
We cut OPL to SELL from Neutral but lift our FV to PLN 6.0 (from PLN 5.4) as we lift our EBITDaL 19E/20E/21E forecasts by 1%/4%/5% thanks to the faster real estate sale and a positive effect from recent ARPU increases. 3Q19 results were boosted by real estate and the BlueSoft consolidation and showed a few positive points like ARPU stabilization, good FTTX net adds, slowing mobile post-paid churn and further indirect costs optimization. OPL’s share price spiked after Orange’s (ORA FP) Invest...
- Konrad Ksiezopolski
Netia: Waiting for delisting
We keep Netia at a BUY despite cutting our FV to PLN 5.5 (from PLN 5.54) as we marginally trimmed our 19/20/21E EBITDA owing to higher than expected costs (inevitable salary pressure, energy costs). Netia’s story is unchanged for almost 18 months. After acquisition of a 66% stake by CPS at PLN 5.77/sh, the market and existing minority shareholders are waiting to see if CPS will take the last step and announce a delisting tender offer, ideally at an unchanged PLN 5.77/sh. However, 12 months sin...
- Konrad Ksiezopolski
Comarch: Expecting a record high year
We keep CMR at a BUY and lift our FV to PLN 226.9 (from PLN 215) as we have lifted our 19E/20E/21E EBITDA forecasts by 21%/4%/2% following a better than expected revenue mix in 3Q19 which supports margins. CMR’s wide product, sector and geographical diversification with a global footprint helps the company to grow. A strong position in ERP Poland, loyalty systems in Trade&Services and Industry segments plus its already strong position in the Telco segment should soon be strengthened when CMR g...
- Konrad Ksiezopolski
Asseco Poland: Nice dividend...but in the price
We keep ACP as a NEUTRAL but lift our FV to PLN 59.90 (from PLN 50.9) thanks to 13%/4% upgrades to 19E/20E NI estimates from faster than expected growth of Formula Systems and Asseco Int. Recently announced 3Q19 results showed that ACP’s backlog was 14% higher YoY driven by Formula Systems +21% YoY, Asseco International +15% YoY and Asseco Poland at -10% YoY driven mostly by the high base of 2018 (banking upgrades) and reduction of the scale of the hardware business (Asseco Data Systems). ACP ...
- Konrad Ksiezopolski
Ten Square Games: Mastering Fishing Clash monetization
We keep TEN at a BUY and lift our FV to PLN 233.4 from PLN 180.5 as the very good results of the Fishing Clash game led us to upgrade 19E/20E/21E net income forecasts by 4%/21%/16%, respectively. TEN’s success obviously comes from Fishing Clash. However, we would argue that TEN is not a single game company. Indeed, Fishing Clash generates ca. 86% of YTD revenues but ca. 25% of gross income after commissions & marketing but before fixed-costs (salaries & other G&A) comes from the visibly higher...
- Konrad Ksiezopolski
Wirtualna Polska: Polish online outperformer
We keep WPL at a BUY and lift our FV to PLN 74.6 (from PLN 67.9) as we upgraded our 19E/20E/21E EBITDA forecasts (by 2%/4%/6%) thanks to higher than expected P&L growth. WPL maintains very good P&L momentum with top-line and EBITDA LfL LTM YoY dynamics at +18% and +10%, respectively (or +32%/+16% reported). This is not only a result of WPL’s exposure to fast-growing ecommerce and online ad or numerous acquisitions but also WPL’s ability to monetize effectively its 21.3m RU base and carry out...
- Konrad Ksiezopolski
LiveChat: Focus on ARPU works
We keep a BUY rating on LVC but cut our FV to PLN 58.4 (from PLN 61.8) due to higher SG&A costs mainly related to Live Chat’s fast organic development with currently ca. 160 headcount (ca. +50% YoY) and ongoing salary pressure especially among IT specialists. We expect the SG&A ratio to be ca. 24-25% for 1YF/2YF/3YF vs ca. 17.5% previously. Net adds have stabilized at ca. +200-300/month (LTM at +250/month) but ARPU has started to grow, reaching a record high USD 99.2, +4% YoY in recently repor...
- Marta Czajkowska-Baldyga
mBank: It is complicated
We maintain our SELL on mBank. We lower our FV by 1% from PLNÂ 308.5 to PLNÂ 304.7, which implies 18% downside. Our 2019E-21E NI forecasts drop by 10% to PLN 1.12bn (-15% YoY), 12% to PLN 1.17bn (+4% YoY), and 6% to PLN 1.39bn (+18% YoY), respectively, on the back of the introduction of the gradual portfolio provisioning of FX loans following the less favourable court rulings, offset somewhat by stronger core revenues. Our NI forecasts are 10%/15%/9% below consensus for 2019-21E, mainly due to e...
- Marta Czajkowska-Baldyga
Santander Bank Polska: CHF mortgage portfolio puts pressure on valuati...
We maintain Santander Bank Poland as a NEUTRAL despite its CHF exposure. We like the growing earnings, supported by the final phase of the DB acquisition, when the integration synergies should outpace considerably the diminishing costs of the integration. However, the NIM recovery may be set back by new regulations, while the cost of risk - especially in the corporate segment - looks low (in 2019E). Plus we have lowered our dividend expectations (50% payout now includes non-distributed earnings)...
- Marta Czajkowska-Baldyga
ING BSK: At its own speed
We keep ING BSK at NEUTRAL within our negative view on the Polish banking sector. The stock price has increased 1.2% in the last 3M, outperforming the WIG Banks index, which lost 12.2%. We like its lower risk profile with above-avg profitability, fast organic growth and limited exposure to CHF mortgages. However, we believe it has been well reflected in the valuation, which remains our biggest concern: it is the most expensive stock in our universe trading at 1.5x 2020E P/B, a 55% premium to Pol...
- Marta Czajkowska-Baldyga
Alior Bank: Consumer loan risk takes its toll
We downgrade Alior Bank to SELL from BUY. We admit we were wrong upgrading the stock in September, not having the full picture on the potential impact of the CJEU ruling about the return of the early repayment of consumer loan fees. Instead the share price has dropped 31% in the last 3 months as a reaction to: 1) a profit warning, with an expected negative annual NII impact from the CJEU verdict of some PLNÂ 320m (i.e. some 35% of our former NP forecast); and 2) exclusion from the MSCI Poland In...
- Marta Czajkowska-Baldyga
Bank Millennium: Significant exposure, insufficient disclosure
We downgrade Bank Millennium to SELL from NEUTRAL. We have cut our FV by 44% from PLN 8.9 to PLN 5.0 (includes a forecast loss on the CHF portfolio of PLN 2.6 per share, i.e. 34%) giving 12% downside. We have adjusted our 2019-2021E earnings for: 1) better-than-expected 3Q19 results; 2) expected result of September’s CJEU ruling concerning the return of the early repayment of consumer loan fees (annual negative impact of some PLN 80m on NII, fading over time); 3) higher BFG fees; 4) introduct...
- Marta Czajkowska-Baldyga
Bank Handlowy: 7% yield hard to ignore
We maintain Bank Handlowy as a BUY. The stock performance is flat over last month, outperforming the WIG Banks index by nearly 10%. The stock has lost nearly 20% YTD, pricing in: 1) a poor performance in the corporate segment cost of risk (requiring the bank to make 2 profit warnings in 2Q19 and 3Q19); 2) the stock’s exclusion from the MSCI Poland Index as of May 29. Although the bank is not our favourite in terms of market strategy, we could not ignore its main attraction – its dividend (DP...
- Marta Czajkowska-Baldyga
PKO BP: Risks outweigh rewards
We have downgraded PKO BP to a SELL from BUY. We lowered our FV by 37% from PLNÂ 48.5 to PLNÂ 30.5 (incl. an expected CHF portfolio loss of PLNÂ 4.1 per share, i.e. 11.5%), which implies 13% downside. The stock price is down 6.3% YTD. It trades at a 2020E P/E of 10.8x, below the sector (11.6x). Given the size of the bank and escalating risks in the sector as stated by the Polish Central Bank, we believe the discount is warranted. State ownership nowadays adds even more risk to the valuation, nam...
- Marta Czajkowska-Baldyga
Bank Pekao: Dividend is not enough
We have downgraded Bank Pekao to NEUTRAL from BUY. The stock lost nearly 12% in a month, underperforming the WIG Banks index, as recent changes to the management board with the sudden departure of the CEO just after the 2020E strategy update conference lowering the ROE target have not helped sentiment. We believe the bank is well positioned to outperform the market with its exposure to FX mortgage risk much lower vs peers, a decent 2020E DY of 6.6% and cost-cutting initiatives that should allow ...
- Nuno Estácio
Iberian Stocks: Termination of Coverage
Owing to a realignment of its business model, Haitong Bank is terminating coverage of Iberian research. This includes: Mota Engil (EGL PL), Altri (ALTR PL), Ence (ENC SM), Navigator (NVG PL), Semapa (SEM PL), Euskaltel (EKT SM), Cellnex (CLNX SM), Mas Movil (MAS SM), NOS (NOS PL), Sonaecom (SNC PL), Telefonica (TEF SM), Antena 3 (A3M SM), Mediaset España (TL5 SM), Indra (IDR SM), Corticeira Amorim (COR PL), CTT (CTT PL), Ebro Foods (EBRO SM), Ibersol (IBS PL), Logista (LOG SM), Tecnicas Reunida...
EBRO EBRO FOODS SA
CTT CTT - CORREIOS DE PORTUGAL SA
COR CORTICEIRA AMORIM SGPS SA
VID VIDRALA SA
VIS VISCOFAN S.A.
SEM SEMAPA SOCIEDADE DE INVESTIMENTO E GESTAO SGPS SA
SNC SONAECOM SGPS S/A
NOS NOS SGPS SA
LOG COMPANIA DE DISTRIBUCION INTEGRAL LOGISTA HOLDINGS S.A.
IBS IBERSOL SGPS S.A.
NVG NAVIGATOR COMPANY SA
EGL MOTA-ENGIL SGPS SA
A3TV ATRESMEDIA CORPORACION DE MEDIOS DE COMUNICACION SA
ENC ENCE ENERGIA Y CELULOSA SA
CLNX CELLNEX TELECOM S.A.
EKT EUSKALTEL SA
TL5 MEDIASET ESPANA COMUNICACION SA
TRE TECNICAS REUNIDAS SA
IDR INDRA SISTEMAS S.A. CLASS A
TEF TELEFONICA SA
MAS MASMOVIL IBERCOM SA
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