Core business remains solid. We remain fundamentally positive on ATM Grupa, as we still consider it as a relatively cheap and decent long-term premium content exposure. Despite the hopefully temporary weakness of the premium content pipeline (which offers no major direct triggers for the core business over the short term), we expect the core business to deliver 7% adj. EBITDA CAGR over 2023E-2025E.
We anticipate another strong contribution from the real estate segment only in 2026E with another tranche recognised within Swedish project (till then the project should consume additional working capital). We could see an improvement in cash generation in the years ahead after some changes in approach to real estate or the potential disposal of the Boombit stake. We assume a dividend of PLN 0.30ps (DY of 8.5%) in 2023E, which includes a PLN 0.12ps advance payment in late 2023E versus PLN 0.08ps paid in 2022.
Overall, we forecast revenues at PLN 250m/265m (-17%/+6% y/y) in 2023E/2024E (excluding the real-estate segment we forecast the 2023E/2024E adj. core business top-line dynamic at +7%/ +5% y/y) and net profit at PLN 35m/36m (-20%/+4% y/y), down from our previous assumption of PLN 37m/44m (mainly due to lower number of premium projects to be recognised in 2023E/2024E than we assumed earlier). We maintain our BUY recommendation but decrease our FV to PLN 4.30ps (implying 23% upside) from PLN 4.50ps.
On our forecasts, ATM Grupa trades at a P/E of 8.4x/8.1x for 2023E/2024E. Small cut in 2023E/2024E premium pipeline. We perceive the management’s comments on the outlook for the premium content pipeline in 2023E/2024E, or the reluctance to develop on its own book new movie projects (or TV series) as a bit uninspiring. With no new major announcements and focus on documentary TV series projects or artistic movies we see a risk that the premium part of the business may not live up to its potential.
Overall we have reduced the number of premium TV series to be produced from 1.3x/2.0x to 1.0x/1.5x in 2023E/2024E respectively. As the demand for Polish content from OTT platforms remains solid, we consider it as more temporary issue rather than structural problem. We do not exclude that with the improvement of attractiveness of ATM Grupa’s developed projects the number of produced premium projects may increase.
Boombit’s never-ending strategic options review process. In our view, with each passing month, the likelihood of concluding the potential disposal of stake in Boombit (4.0m shares, 29.54% of Boombit’s equity) is becoming lower, especially, as the strategic review process has started back in November 2021.
Given company’s cash position, and apparent reluctance to take risks within premium content area, it seems there is no immediate need for the company to convert Boombit’s stake into cash. However, in our view company’s minority shareholders would welcome one-off extraordinary distribution from the potential Boombit’s disposal, rather than maintaining the current level of Boombit’s contributions to the company’s bottom line and dividend inflows.
