Monnari Trade S.A. engages in the design, outsourced production, marketing, and sale of clothing products and accessories for women in Poland and internationally. It sells its products under the MONNARI brand through its network of stores and online. The company was formerly known as MONNARI s.c. and changed its name to Monnari Trade S.A. in 2000. Monnari Trade S.A. was founded in 1998 and is based in Lodz, Poland.

Poland

Monnari Trade S.A.

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

MON.WA reported revenue of PLN 314mn in the last 12 months, up 1% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 2% from FY23 to PLN 0.72. Market expects EPS to reach PLN 0.57 in FY24.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 2ppts and its growth decelerated by 4ppts in the past month. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months its performance trailed that of this peer group by 16ppts and its growth decelerated by 3ppts in the previous month. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported modest EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.6% in the last 12 months, a decline from 11.6% in FY22. 

Historically, MON.WA has reported good net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 5.9%, down from 20.0% in FY22. 

Monnari Trade S.A. reported a return on equity (RoE) of 6.7% in the last 12 months, down from 24.0% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to 5.3% in the last 12 months, a decrease from 16.2% in FY22. 

In the last 12 months, the return on capital employed (RoCE) declined to 6.3%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 1.4 in the past several years. This ratio implies a average shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

MON.WA has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is usually stable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note strong debt servicing capacity, adequate interest coverage, and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, bleak profitability, poor working capital management, and poor cash flow generation.

In highly turbulent market conditions, MON.WA is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, MON.WA is moderately volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move slightly wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from low to mild. We would also like to highlight the mild intraday volatility of the instrument. 

Based on key historical and expected multiples, the stock is greatly undervalued relative to its peers. In particular, the stock is underpriced on P/E, 'cheap' on EV/EBITD. 

Monnari Trade S.A.

PLN 4.95

4

Monnari Trade S.A.

PLN 4.95

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

PLN 4.95

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