WSE Research Coverage Support Program 4 July 2022 06:00 CEST
ATM Grupa
Temporary delays
We remain positive on the company’s long-term premium content exposure, as we strongly believe ATM Grupa is able to benefit from the trend of adding local content by OTT platforms. However, in the short term the company is not spoiling investors with unexpected either delays or one-offs. Firstly, we consider negatively the delay of production of the “Black Dog” TV series for Viaplay, which limits the number of premium TV series to be recognized in 2022E. Moreover, we highlight the delay in recognition of the contribution from the Swedish real estate project (to 2Q22E from initially planned 4Q21), recognized in 4Q21 a PLN 6.3m write-off on a loan to an associated company (we do not assume its reversal) and uninspiring the TV production segment revenues in 1Q22 (we expect flattish revenues from TV content production in 2022E/2023E). On top of that, the company’s associated companies unfortunately do not ease the situation (beside the mentioned one-off, also the value of Boombit’s stake has been declining, while Black Photon’s performance so far is below our initial expectations). We forecast 2022E/2023E revenues at PLN 263.5m/259.0m (+18%/-2% y/y, with 2022E being boosted by PLN 35m from the Swedish project) and net profit at PLN 40.0m/43.1m (+63%/+8% y/y). We maintain our BUY recommendation, but mainly due to higher cost of capital and Boombit’s lower market value, we decrease our FV to PLN 4.40 per share (implying 27% upside) from PLN 5.80ps. On our forecasts, ATM Grupa trades at a P/E of 7.3x/6.8x for 2022E/2023E, or at 7.2x/7.0x adj. P/E for 2022E/2023E if Boombit is excluded.
Temporary delay in premium content pipeline does not affect long-term story. Following the delay in production of the “Black Dog” TV series for Viaplay to 2023E we cut the assumed number of premium TV series projects to be recognized in 2022E revenues to 1.6x (with “Lovzone” ordered by Netflix being the anchor project), down from the 2.5x equivalent assumed previously. However, we slightly upgrade our long-term expectations for premium content uptake, as we believe OTT’s services will be gradually increasing the orders on local markets (in our view, entrances of Disney+ and HBO Max to Poland supports such an expectation). As an example, we point to Netflix’s recent announcement of ordering 18 original productions in Poland in 2022E/2023E (including 9 TV series and 9 movies), out of which unfortunately only one project was allocated to ATM Grupa.
Potential Boombit disposal may stumble on mobile games market sentiment. With Boombit’s share price declining by 42% (adj. by dividend) since ATM’s announcement of a strategic options review process regarding its stake in Boombit (4.0m shares, 29.63% of Boombit’s equity), we consider the probability of a potential sale of the stake in Boombit as even lower than previously. Hence, we keep our base assumption and we do not include the potential disposal in our forecasts, although in our view focusing more on core content related operations (or paying a one-off dividend) would be welcomed by the market.
Analysts
Marcin Nowak
+ 48 22 236 92 44
Michał Wojciechowski
michal.wojciechowski@ipopema.pl
+ 48 22 236 92 69
