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CEE distributor sees share price up 50% in quarter, expects more

CEE distributor AB Group has reported strong earnings in the last year, but complains that its share price, although up by 50% in the first quarter, still does not properly value the business.

In 2020, distributor AB Group sales were over PLN 11.9bn (€2.4bn) in sales, which means that it grew much faster than the IT distribution market in Poland, the Czech Republic and Slovakia (+27% vs.  19%), it says.  EBITDA exceeded PLN 151m (€33m), up +44% y/ and net profit amounted to PLN 100m (€21m).  In Q4,  the AB Group recorded over PLN 4.2bn in revenues (+30% y/y).  EBITDA (PLN 70 million) increased by almost 78% and net profit (PLN 53 million) increased by 98%.  Profitability on sales improved by 0.44 pp on the EBITDA level and by 0.42 pp on the net level. 

In Q1  2021, AB's share price increased by nearly 50%, approaching PLN 50 per share. "This is still less than book value, not to mention the real value of a business built up over 30 years, which even in such volatile times is prepared to operate very efficiently and grow its market position.  However, we are pleased that some investors have already recognised that the AB Group has become an e-commerce company, a company investing in new technologies such as process automation and artificial intelligence, and a company based on new technologies. 

"The current valuation of AB's shares, therefore, seems all the more surprisingly low compared to other companies in the industry, and comparatively speaking, AB's capitalisation would be justified as being even several times higher than it is today.  At the same time, we intend to continue to share profits with our shareholders, a rare combination of 'growth' and 'value' characteristics.  We have ambitions to deliver high-value dynamics to our investors," says AB Group's CFO Grzegorz Ochędzan. 

"The AB Group has ambitions to grow at a double-digit rate in 2021, leveraging its competitive advantages in the fast-growing CEE IT and e-commerce market.  In 2020, we increased the scale of our business by 27%, while the market in Poland, the Czech Republic and Slovakia grew by 19%.  This year we see further acceleration of the market growth," he says.

"A very dynamic growth continues in categories such as notebooks, smartphones and network devices.  Smartwatches, for example, are an interesting item, with sales in Poland estimated to have increased by over 200% y/y in Q1.  In the telco segment, we are both benefiting from the success of Apple, for which we are the largest distributor in the region, as well as we have been building our position with brands that are growing in our region.  We are glad that the segment of advanced solutions and investments in the enterprise sector, the so-called VAD market, is also strong, where we expand our offer of products and solutions and invest in the education of resellers through the AB Competence Centre and where we support our partners with a staff of specialised engineers," added Grzegorz Ochędzan.