Equity Analysis /
Bulgaria

Speedy AD: Speedy Update - April 2020

    Contributors
    Martin Dimitrov
    Nadejda Dafinkicheva
    First Financial Brokerage House
    29 April 2020

    SPEEDY EXPECTED BUYOUT BY GEOPOST PROVIDES CATALYST TO ALREADY WELL PERFORMING BUSINESS • Geopost, holder of 25% of Speedy, has the option to increase stake by 45% in 2020. • The expected strike price is 8.00x EV/EBITDA, which we expect to yield a share price of BGN 51.3.
    • Speedy operates in one of the few industries which should not be hard hit by the COVID-19 lockdown. • Estimated 40% share of B2B business does make the company susceptible to lost revenue during the short term. • Growth in consumer business and reduced fuel prices should counter negative impact. • Long-term, the business is one of our favorites, as e-commerce penetration is low, leaving plenty of room for double digit growth. • We believe dividend distribution track record will be maintained, if majority shareholder remains. • Our “Hold” rating for the stock is based on the Geopost option strike price, the intrinsic value of the stock, tightly held ownership structure (little price volatility/liquidity) and the fair chances of benefiting on the high cash generation potential through dividends.