The AB Group is just gaining momentum

AB Group, the largest distributor of IT and consumer electronics in the CEE region, ended the first session after the publication of its interim report with a 19% increase in its share price and a historic surpassing of the PLN 40 threshold.  The increased investor interest was driven by a strong acceleration in the growth rate of its financial results and a margin growth unexpected by analysts.  As a result, the generated operating profit for the fourth quarter of 2020 beat analysts’ consensus calculated by PAP by 41% and net profit – by 56% (table  LINK). The results and the prices, however, may only start gaining momentum.

„Our valuation continues to be surprisingly low. We have already accumulated close to a billion zlotys of equity so the book value of our shares is approaching PLN 60 and that is just the book value.  Our P/E ratio of around 6 certainly does not reflect the spirit of a technology company, an e-commerce company.  Thanks to many years of investment in sales process automation, warehouse automation, thanks to the start of using artificial intelligence and business intelligence tools to optimise commercial operations, we see room for a continuation of the trend of increasing operational effectiveness.  At the same time, we are strongly encouraged by the market, which is supported in the long term by the macroeconomy, the accelerated digital transformation of our region’s economies and additional national and EU funds, as well as the dynamic development of e-commerce,” said Andrzej Przybyło, CEO of the AB Group.

„We also have a strong balance sheet, healthy finances.  We generate cash and keep increasing profit.  We, therefore see room to share profits with our shareholders, even to a greater extent than before.  I am thinking of dividends and/or share buybacks.  Answering the questions about the share buyback so far, I can point out that it has not been carried out recently due to the closed period before the publication of the interim report and due to the maximum ceiling for the purchase of our own shares, which is too low compared to the current price,” Grzegorz Ochędzan, CFO of AB Group, explained during the presentation.

Looking at the individual business segments, there are naturally strong volume increases in goods desired for remote activities – such as laptops.   It is worth noting at this point that the AB Group, thanks to maintaining a large warehouse buffer, ensured the availability of equipment even in the period of the greatest turbulence in the area of supplies from Asian countries.

„However, projects in the business segment, or VAD, are a good example that it is not just about the goods in stock.   Here you need to be competent, that is what generates sales.  The result is that for the full year 2020, AB’s sales of the VAD segment grew twice as strong as the market, by 78%,” emphasised CEO Przybyło.

He also pointed to the company’s strong position in the telecommunications equipment segment, where AB’s portfolio includes two of the most interesting manufacturers – the fastest-growing market OPPO and Apple, which represents the greatest value-added.  In the gaming segment, on the other hand, sales could be significantly higher than the 60% achieved for games and consoles if manufacturers did not have to face component shortages.

„However, the most promising segment is the cloud, i.e., the consumer model of selling software.  We are now showing increases of 60% here, but we are waiting for the momentum when this market, now a hidden dragon, in line with global expectations, simply explodes in value.  The market requires investment at every level, including in resellers’ knowledge and product recognition among customers.  We are still in an initial period where we are investing a lot because it is a typical multiple 'win’ model for manufacturers, distributors, dealers and end customers.  In the long term, I am convinced that it will be one of the main legs of the whole industry, not only of the AB Group,” said CEO Andrzej Przybyło.

Representatives of the AB Group devoted much attention during the conference to e-commerce.  On the one hand, AB is an e-commerce company where transactions with partners take place automatically, virtually, and on the other hand, the company has a full portfolio of e-commerce tools for small and medium-sized businesses and also offers modern logistics services for retail, such as dropshipping.  On the topic of online sales, many questions from conference participants concerned about the launch of Amazon’s Polish platform.

„Amazon is a global leader in e-commerce, AB is in turn a regional leader in the distribution of IT and consumer electronics products.  Our cooperation is inevitable.  We have been working with Amazon since 2012. However, it is the suppliers who will place an appropriate emphasis on the individual sales channels in the right way.  Nevertheless, Amazon is certainly another market opportunity for the development of sales for our customers,” pointed out CEO Przybyło.


More information can be found in the materials available below.


Press release on the 2020 results – link

Presentation from the conference – link

Interview with AB Group’s COO – AB Group’s interim report – link