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Family-owned company with potential for long-term growth

PH
PhetuvovInvested
Community Contributor

Published

October 12 2024

Updated

October 15 2024

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  • In 5 years, the company should significantly expand its portfolio of stores in countries other than Poland, open up to new markets, and introduce e-commerce and applications of its brands to new countries. Due to the fact that it has five brands, each targeting a different audience, the company has a wide scope for action and further development, as the brands it has are not in competition with each other, but complement each other perfectly.
  • Due to the planned growth of mainly the Sinsay brand, whose business model is value-for-money, I forecast a slight reduction in gross profit and net profit margins, while revenue will increase. The company plans further expansion, mainly in the Balkans and Ukraine, where a brand like Sinsay will fit in well, due to its low prices and product quality, as well as its wide assortment.
  • I think the price will follow EPS, which should grow at least 13% on average per year. According to this, in 5 years the price should be around 29200 (unless the company does a stock split). Growth should thus reach about 84%.
  • High interest rates are taking a toll on Poles' ability to buy. At the end of next year, the first interest rate cuts are planned, which may improve the situation for consumers. The share price probably already takes this scenario into account, but some shareholders may start to get impatient and demand a significant jump in earnings already in the near future, which I would not assume, however.

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Disclaimer

The user Phetuvov has a position in WSE:LPP. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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Fair Value
zł15.9k
8.5% undervalued intrinsic discount
Phetuvov's Fair Value
Future estimation in
PastFuture05b10b15b20b25b20132016201920222024202520282029Revenue zł29.3bEarnings zł2.6b
% p.a.
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Current revenue growth rate
17.16%
Luxury revenue growth rate
0.24%
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