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ZUE Company: Strong Revenue Growth in Q1-Q3'23 with Future Profitability Opportunities and Expansion into Foreign Markets

ZUE Company: Strong Revenue Growth in Q1-Q3'23 with Future Profitability Opportunities and Expansion into Foreign Markets
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The company has had a revenue strong Q1-Q3'23 (we also expect high throughput in Q4'23). At the same time, margins are still not helped by the "difficult" contracts of 2017 (heading to completion at different rates) or the tram contracts won before the outbreak of war in Ukraine. In recent months, the company's backlog was strengthened by a large contract for PKP PLK (Katowice-Będzin). It should be taken into account, however, that after the company's record-breaking throughput in 2023 (higher than our earlier expectations), the next year in this field may be weaker. On the other hand, we see opportunities for improvement on the profitability side, due to the reduced importance of problematic contracts or potential valorisation and surcharges.

In the medium term, ZUE is well positioned for an influx of EU funds (both rail and tram infrastructure). In the last two years, the company has also entered foreign markets more extensively, which should build competence to become independent from the domestic market. We currently set the fair value (target price) of ZUE shares at PLN 8.43, implying an accumulate rating (previously: buy, PLN 7.76). The valuation does not take into account possible claims and valorisation from PKP PLK (lawsuits filed for PLN 93m, ca. PLN 4.0/share).

 

zue company strong revenue growth in q1 q3 23 with future profitability opportunities and expansion into foreign markets grafika numer 1zue company strong revenue growth in q1 q3 23 with future profitability opportunities and expansion into foreign markets grafika numer 1


GPW’s Analytical Coverage Support Programme 3.0

GPW’s Analytical Coverage Support Programme 3.0

The Warsaw Stock Exchange's (GPW's) Analytical Coverage Support Programme 3.0 supports investment firms in drafting analytical reports which are financed by GPW. The objective of the Programme is to improve the availability of research covering less liquid companies, facilitating investors' informed investment decisions based on a reliable independent source of issuer information. Eligible to participate in the Programme are companies listed on the GPW Main Market (other than WIG20 participants) and on NewConnect. The Programme covers up to 50 issuers.

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