Dom Maklerski BZ WBK SA

Poland – Financial Services
Polish Equity Research
Warsaw, May 10, 2012
Presented material constitutes a supplement to the report issued on 26 April 2012
RECOMMENDATION
MAGELLAN – 1Q12 RESULTS REVIEW
BUY
[AS OF 26 APR 2012]
CURRENT PRICE: PLN 42.15
TARGET PRICE: PLN 64.1
Solid results, good origination
[TARGET PRICE AS OF 26 Apr 2012]
Dariusz Górski
Salesnote
+48 22 586 8100; [email protected]
Magellan has reported solid in-line 1Q12 results this morning with earnings of PLN 8.6m (up 22% yoy), EBIT of
PLN 10.8m (up 23% yoy) and revenues of PLN 27.5m (up 42%). Origination was strong – PLN 223m (up 36%
yoy) on balance sheet and PLN 194m (up 132% yoy) off-balance sheet.
Magellan: 1Q’12 results in brief
(PLNm)
Revenues
EBITDA
EBIT
Net profit
1Q12
27.5
11.1
10.8
8.6
1Q11
19.3
9.0
8.8
7.0
y/y
42%
24%
24%
22%
4Q11
26.7
11.0
10.8
8.3
q/q
3%
1%
0%
3%
1Q12E
28.5
11.2
11.0
8.5
Source: Company data, DM BZ WBK estimates
Revenues increased 42% yoy to PLN 27m, a tad below our expectations. Product portfolio grew 47% yoy to PLN
726m with qoq growth of PLN 26m representing 12% of PLN 223m on-b/s originations (up 36%). Subsidiaries combined
showed a 21% yoy drop in on-balance sheet originations but their portfolio was up by healthy 73% yoy. Increasing
competition and changing mix pushed the income margin to 15.1% from 16.1% in 4Q11 and 15.6% in 1Q11. With
funding cost of 8.8% (stable q/q), the spread narrowed to 6.4% from 7.2% in 4Q11 and 7.6% in 1Q11. Gross profit grew
22% to PLN 16m and was marginally below the 4Q11 record PLN 16.4m, while gross profit margin decreased below the
60% mark from 61% in 4Q11 and 68% in 1Q11. The 19% yoy growth of opex remained below this of gross profit (up
22%) allowing some operating leverage (EBIT up 23% yoy). Opex/gross profit ratio improved to 32% from 34% in 4Q11
and 33% in 1Q11, but EBIT and EBITDA margins contracted slightly to c. 40% from 40%+ in 4Q11 and 45% in 1Q11.
Finally, net profit margin of 31% was close to this in 4Q11, though materially below the 37% in 1Q11. ROE stood at
18.6%. For more details of the results please check overleaf.
Portfolio’s maturity continued to extend with the share of 1YR+ receivables at 36% vs. 28% in 1Q11. Funding
changed accordingly with the share of s-t interest bearing funding down to 58% from 66% in 1Q11 and s-t liabilities/s-t
receivables ratio at 69% vs. 68% the year before and quick ratio at 1.43x vs. 1.48x respectively. Leverage
(assets/equity) increased to 4.0x from 3.3x the year before, net debt/equity increased to 2.9x from 2.0x.
Subsidiaries combined earned PLN 1.4m (up 548%), while foreign subsidiaries PLN 1m vs. PLN PLN 0.4m same
period last year. We noted that the Czech subsidiary made a net loss following tiny profit last year.
Solid results with gross margin compression coming as expected (we expect 55% in 2012 vs. 64% in 2011),
good control of costs and strong originations. With 1Q12 earnings representing 24% of our full year estimate,
the company seems well on track to deliver on our expectations. Remains an inexpensive (albeit admittedly far
less liquid too) alternative to banks. BUY.
Company Data
PLNm
Revenues
EBITDA
EBIT
Net income
EPS (PLN)
P/E (x)
EV/EBITDA (x)
2011
90.6
39.4
38.6
30.5
4.67
9.0
19.6
2012E
121.9
46.0
44.9
35.3
5.41
7.8
21.4
2013E
147.6
54.3
52.9
41.7
6.41
6.6
21.6
2014E
184.4
66.3
64.6
50.9
7.82
5.4
20.4
Reuters/Bloomberg codes
MAGL.WA / MAG PW
Market capitalisation (PLNm)
275
Number of shares (m)
6.5
Free float (%)
32%
Average daily volume (PLNm)
0.1
1M
3M
YTD
Price performance
-3.3%
5.9%
10.9%
Source: Company data, DM BZWBK estimates.
Dom Maklerski BZ WBK S.A. with its registered office in Poznan, Pl. Wolności 15, 60 - 967 Poznan, registered by the District Court in Poznan – Nowe Miasto i Wilda, Division VIII
Commercial of the National Court Register under the number KRS 0000006408, Taxpayer Identification No. 778-13-59-968, with share capital amounting to PLN 45 073 400 fully
paid up. DM BZ WBK S.A. is subject to the supervision of the Financial Supervision Commission.
The disclaimers concerning the nature of the published document are found on the last page of the document and constitute its integral part.
Polish Equity Research
SALESNOTE: Magellan
Fig. 1. Magellan – quarterly results at a glance
(PLNm)
Revenues
Income yield
Funding cost
Cost of portfolio funding
Spread
Gross profit
Gross profit margin
Opex
EBITDA
EBIT
Pre-tax profit
Net profit
Origination (on-balance)
Origination (off-balance)
Product portfolio (EOP)
Debt (EOP)
2
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
yoy
1Q12E
13.8
18.1%
-3.6
-10.4%
7.8%
10.1
73.5%
-3.6
6.6
6.5
6.5
5.1
111
65
306
147
15.3
18.6%
-4.2
-10.3%
8.3%
11.0
72.2%
-4.0
7.1
7.0
7.1
5.6
157
59
352
184
15.9
16.4%
-4.8
-8.9%
7.4%
11.1
70.0%
-3.7
7.6
7.5
7.4
6.0
157
33
425
243
21.3
18.8%
-5.5
-8.2%
10.6%
15.9
74.3%
-7.2
8.9
8.6
8.7
6.9
164
53
485
291
19.3
15.6%
-6.2
-8.0%
7.6%
13.1
67.9%
-4.3
9.0
8.8
8.8
7.0
164
83
504
326
21.4
15.7%
-7.4
-8.2%
7.5%
13.9
65.2%
-4.7
9.4
9.2
8.8
7.0
210
144
587
401
23.2
15.4%
-9.0
-8.6%
6.8%
14.3
61.4%
-4.4
10.0
9.8
10.0
8.1
165
98
618
434
26.7
16.1%
-10.4
-8.8%
7.2%
16.4
61.2%
-5.6
11.0
10.8
10.6
8.3
306
213
713
507
27.5
15.1%
-11.5
-8.8%
6.4%
16.0
58.2%
-5.2
11.1
10.8
10.7
8.6
223
194
739
542
42%
-3%
86%
9%
-16%
22%
-14%
19%
24%
23%
21%
22%
36%
132%
47%
67%
28.5
15.9%
-11.5
-8.9%
7.0%
17.0
59.6%
-6.0
11.2
11.0
10.8
8.5
213
125
722
532
Dom Maklerski BZ WBK S.A.
Institutional Sales Department
5A Grzybowska St.
00-132 Warszawa
fax. (+48) 22 586 81 09
Equity Research
Pawel Puchalski, CFA, Head
tel. (+48) 22 586 80 95
[email protected]
tel. (+48) 22 586 81 55
[email protected]
tel. (+48) 22 586 81 00
[email protected]
tel. (+48) 22 586 82 36
[email protected]
tel. (+48) 22 534 16 10
[email protected]
tel. (+48) 22 586 81 59
[email protected]
tel. (+48) 22 586 82 33
[email protected]
tel. (+48) 22 586 82 25
[email protected]
Telecommunications, Metals & Mining, Power
Pawel Burzynski
Strategy, Oil & Gas, Chemicals, Agriculture, Biotech
Dariusz Gorski
Banks, Media
Tomasz Sokolowski
Pharma, Retail
Zbigniew Porczyk
IT, IT Distribution, Industrials
Adrian Kyrcz
Construction, Real Estate
Maciej Marcinowski
Wood & Paper, Quantitative analysis
Lukasz Kosiarski
Video Games, Health Care
Sales & Trading
Bartek Godlewski, Head
tel. (+48) 22 586 80 44
[email protected]
Wojciech Wosko
tel. (+48) 22 586 80 82
[email protected]
Kamil Cislo
tel. (+48) 22 586 80 91
[email protected]
Grzegorz Kolodziejczyk
tel. (+48) 22 586 80 90
[email protected]
Blazej Leskow
tel. (+48) 22 586 81 57
[email protected]
Pawel Szczepanski
tel. (+48) 22 586 80 87
[email protected]
Marcin Kuciapski
tel. (+48) 22 586 80 96
[email protected]
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