Bernstein: Poland’s Allegro has higher enterprise value to earnings ratio than Amazon

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Bernstein: Poland’s Allegro has higher enterprise value to earnings ratio than Amazon

Poland’s most popular e-commerce platform, Allegro, debuts on the Warsaw Stock Exchange today – buoyed by the fact their enterprise value to earnings ratio is estimated to be higher than the likes of Amazon and Alibaba.

Analysts at Bernstein have estimated that Allegro’s enterprise value to earnings before interest, taxes, depreciation and amortization is around 37, which is higher than international household names like Amazon.com Inc and Alibaba Group Holding Ltd.

Although Allegro is not currently a big name outside Poland, the opposite is true within the country. The platform successfully fended off Ebay when they tried to enter the Polish market in the noughties, and to this date, appear to have dissuaded Amazon from running a fully-fledged service in Poland.

Although Amazon do have distribution centres in Poland, and orders can be made in the country using the Polish language version of amazon.de, Allegro is arguably the main reason Amazon hasn’t cracked the market there yet. Amazon are nonetheless expected to take on Allegro in the future, and Haitong analyst Konrad Ksiezopolski is quoted as saying that competition from both Amazon and Aliexpress will be a „real test of Allegro’s valuation”.

On the other hand, Allegro believe its lower seller fees and loyalty program, as well as its the huge number of sellers, will play to their advantage. The company also enjoy huge brand recognition in Poland and can offer consumers fast and convenient delivery to parcel lockers thanks to a tie-up with Polish carrier InPost.

Allegro’s s e-commerce platform has a user base of approximately 12.3 million active buyers who have access to offers from 117,000 sellers. On average, 32 million transactions per month are made on its platform – not bad in a country with a population of 38 million people.

According to interia.pl, Allegro’s capital expenditure in 2020 will amount to PLN 230-270 million, in 2021 it is projected to increase to PLN 425-475 million, and in 2022 to PLN 550-650 million. Spurred on by the growing demand for online shopping during the pandemic, Allegro’s profits in the first 6 months of 2020 also rose from PLN 195.7 million to PLN 289.7 million.

Meanwhile, the listing of Allegro’s shares started at 9.15 am CET today; the Warsaw Business Journal reports that as many as 1.023 billion shares of Allegro.eu are to be traded. Allegro’s shares are currently valued at 65PLN a piece, while the entire company is valued at 44 billion PLN – making it the largest IPO in Poland’s history.

Photo credit: Allegro

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