Zegona Communications (1K) | Buy | Three drivers of a rare opportunity

研报英文原文证据摘录

Zegona Communications (1K) | Buy | Three drivers of a rare opportunity

slightly optimistic, we expect Zegona to continue delivering FCF 265 290 519

gradual improvement and a c. 1.2% revenue CAGR over the next three years. We EPS adj. and ful. dil. 0.25 0.61 1.55

Consensus EPS 66.8 111.7

see more visibility on the top line and increase our FY 2028 estimate by 2%. Net dividend 1.87 0.90 1.62

The Spanish market is set to continue to show good volume growth (c. 4% in FBB FY to 31/03 (EUR) 03/26 03/27E 03/28E

in 2025), far above other large countries, driven by GDP, immigration, and P/E adj and ful. dil. 75.8 31.6 12.4

penetration in second homes. Vodafone Spain is pushing on convergence, brand EV/EBITDA 4.7 4.4 4.2

awareness, and add-on products. Premium brands continue to increase prices EV/EBIT 21.2 18.1 14.8

FCF yield 6.1% 6.7% 12.0% annually in line with inflation. We also see some other pockets of growth in grid Dividend yield 9.9% 4.7% 8.4%

enterprise products, football in bars, SMEs, prepaid business, and wholesale. ND(F+IFRS16)/EBITDA 2.3 2.1 2.0

Deconstructing the forecasts Gearing nm nm nm

ROIC 10.7% 9.7% 12.3%

We think there is still sizeable upside for cost optimisation, churn reduction, and EV/IC 2.3 2.4 2.5

increased asset utilisation, and the company can be run with stable capex.

Sector Most Pref. Sector Least Pref.

We increase our FY 2028 EBITDAaL and operating FCF estimates by 1.3% and 3.4%, TIM Group NOS

respectively, and now forecast 2026-29 CAGRs of 4% and 7%, respectively . Zegona Communications Proximus

Swisscom

We also increase D&A, reflecting the accelerated depreciation of the cable

network, driving large EPS cuts but with no FCF impact.

We increase the expected payout to 70-75%, as ongoing re-pricing is de-risking

the balance sheet.