October 1 (SeeNews) - Austria's Raiffeisen Centrobank (RCB) said on Thursday it kept its "buy" recommendation on Croatian company Adris and lifted the target price for the stock.
Adris is primarily a tobacco company with lucrative earnings holding a share of around 80% of the Croatian market, RCB said in the statement.
"Our 12M target price amounts to 415 kuna per share and implies a 53% upside to preferred shares and 39% to common shares," RCB said. The previous target price was 281 kuna.
The company is constantly diversifying its operations but also extending the vertical integration. Large CAPEX (Capital Expenditure) is mainly spent on hotel capacity upgrades and tourism becomes more and more important in the overall group, the statement added.
"Last year, despite the drop in sticks sold (-6.3% yoy) the company reported a significant increase in EBITDA [earnings before interest, tax, depreciation and amortisation] margin but the final result suffered from mark–to-market financial assets."
“In the current year, we reckon with positive valuation movements on the stock exchange which will help to restore growth on the bottom line,” RCB said.
The company’s shares were traded at 309.98 kuna ($62/43 euro) by 1203 GMT on Thursday, 3.67% up from its previous close.
(1 euro = 7.2735 Croatian kuna)