The average target price of PCF.WA is 11 and suggests 96% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 13.2. This translates into 141% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 9.0. This suggests 64% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

PCF Group Spólka Akcyjna develops and publishes computer and mobiles games. The company was founded in 2002 and is based in Warsaw, Poland.

Poland

PCF Group Spólka Akcyjna

Consumer Cyclical

The company pays dividends irregularly. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

PCF.WA reported revenue of PLN 171mn in the last 12 months, up 14% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 20% from FY23 to PLN -2.63. Market expects EPS to reach PLN 0.70 in FY24.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 29ppts over six months and grown 9ppts faster in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is slightly negative.

The company has reported weak EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -47.8% in the last 12 months, a decline from 28.8% in FY22. 

Historically, PCF.WA has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -55.3%, down from 10.8% in FY22. 

Another important profitability metric, return on assets (RoA), amounted to -22.7% in the last 12 months, a decrease from 5.6% in FY22. The market analysts predict that RoA will be 2.8% in FY23, again weaker than its peers. 

PCF Group Spólka Akcyjna reported a return on equity (RoE) of -28.7% in the last 12 months, down from 7.0% in FY22. The market consensus projects an RoE of 3.6% in FY23, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -25.3%, below the peers. The consensus estimate for FY23 for RoCE is 5.2%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.1 in the past several years. This ratio implies a weak 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.

PCF.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 very unstable 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 low margin volatility, adequate interest coverage, solid cash flow generation, 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, and negligible return on capital.

In highly turbulent market conditions, PCF.WA is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, PCF.WA is highly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change somewhat erratically. The stock's losses on its worst days (less than 1-5% of the time) will range from large to substantial. 

From both historical and forecast perspectives, the stock is considerably underpriced compared to similar stocks. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITD. 

PCF Group Spólka Akcyjna

PLN 5.55

3

PCF Group Spólka Akcyjna

PLN 5.55

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

PLN 5.55

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