CFA Institute Research Challenge

Team Simplicity

Comarch share assessment Report

Date 09/11/2016
Current Price: 163.00 PLN
Recommendation: BUY
EUR/PLN: 4.34
Target Price 184.14 PLN

Brief introduction:
Comarch is a medium size Polish IT Company, specialized in software
for Enterprises, that also provides network implementation services
with an aim to expand in foreign markets. With some subsidiaries
around Eastern Europe, it has the intention to expand through all
Europe.

Breakdown:
We evaluate the fair value of the shares of Comarch SA with a price
of 184.14 PLN with a BUY recommendation as per closing market
of 11/09/2016. We will start with the assumption that according to
our previous data, the operating costs and the investment will raise
consistently when compared to the previous years results.
We also assume that the revenue will raise 10% per quarter and the
tax rate will stay at 19% (which differs from the report of February
were calculated as 23%), WACC will stay unchanged as we forecast
that for 2016-2022 the value should remain unchanged.
We suppose that for the next 6 months the growth rate will be 0.57%
per quarter with no likely possibility of variation. Examining our data
and our forecast, Comarch has a steady rate of EBITDA that
increases over the quarters.
By our calculation, the amount of debt should also decrease albeit
very slightly with a small increase in the equity.
All of our data were took from Reuters, the 11/09/2016 after the
marketing closure.

Share Price Change:

Source : Reuters

During the first quarter, Comarch secured a considerable investment

loan and several contracts for various project, which lead to a starting
increase in its price while on the second quarter another loan was
secured with the aim of building a new office building.
In the beginning of the third quarter, the decision to sell the shares of
the president together with a major contract with Telefonica Group
had the influence to lead to a steady growth of the share price.
However, by the start of the fourth quarter the rise started a fast
decline possibly related to the decision of establishing a mortgage on
its assets.