WoW I would never expect that any foreigner know anything about such a niche company from Poland. Nice to read your analyse. In This case the details metters a lot and I will tray to clarify some of them below.
We have got several important factors that affect previous operation results. It is important to know them to estimate comapny's potential correctly. First let take a look at the company in genaral:
There are three main segments in Telestrada operations.
The first is phone services that consits of 2 subsegments. Land-line phone services that decrease about 3-4% per quarter. According to the Q1 report there are about 12.5k active numbers. The rest is mobile phones mostly. They have low cost "LaitMobile" brand https://lajtmobile.pl. This part is increasing about 3-4% per quarter. The offer is currently very atracctive mainly becouse of the raising prices among comeptitiors. So, to sum it up - this segment is growing about 10-12percent per year. Number of cards is reportent monthly. There is stady incerease about 1%percent per month.
The second part is telko servies for prisoners. The brand here is WhitePhones https://whitephone.pl The company have kind of old school aparats in prison. Thats highly profitable segment. Becouse of TLS position the margin is very good. In this segmenet the top performance has been reached. There is no way to further increase the number of phone aparats in prision but there was some restrictictions impose on the prisoners by previous Polish governemt. So theoretically, some growth couse by the amount of phone calls or some pricing change is possible.
The last one are business services. They do some telko traffic management, call trees services etc. I am not able to estimate growth in this segment so I assume const results in my estimations
A few fact about the fine:
The fine was imposed by Polish UOKIK office in 2020yera. It was fully ecounted in 2020 results. There was a long legal process (some appeal )and the final setence was published at the beggining of this year. Now, the case is the past - that's no longer importent. It is not affect current results in any way.
"Also the company writes it made an investment of almost 10 million PLN in another listed company to avoid the fine."
That's a total misunderstending. There was a period with very low interest reate, acctualy everywhere around the world, so the comapny had 10milion PLN and a potential fine a copule of years ahead. Theere was a plan to inwest it in another company with ticker CPS. CPS stock prices decreased havely and it affected past company results.
Just take a look at the financial cost. That's a result of market cap reeavluation of CPS's stocks that TLS have. Now this tendency turned and CPS stock is rising, so the efect will be positive. The operation was taken not to avoid the fine but the resaon was simply related to capital allocation.
you can follow most of Polish companies results here:
In 2023 there was no share repurchase - the reason for that was: liquidation of shares that are preciously boutht. Then at the beggining of 2024 they had sentence publication and just after that the repurchase process was finallized.
Another importent case is the company currently has its own office in Wrasaw and some lands where another one will be build
In my own calculations, I assume that the comapny is currenntly able to earn 8-9milion. This year positive CPS reevaluation is very likelly. So at the net profit level even 10milion is possible. That is my estimation of repetative expected result . So the true forward PE is about 4-5.
Sorry for my English :)
Please let me know if you have any specific questions.
Thanks a lot for this comment with detailed research, it is very helpful for others. As everyone can see there is a lot to know with even the smallest companies, more than my superficial research will reveal. In my case I have many small positions in stocks with statistically favorable properties. I do research to check whether these statistical properties are real, for example the earnings and to avoid bankrupt companies and frauds. I also use research to avoid stocks with growth stories or potentially very favorable events that are easy to predict since such circumstances make stocks bad bets. Because I own so many different "hairy" stocks it won't move the needle much if I am wrong on one of them.
"I also use research to avoid stocks with growth stories or potentially very favorable events that are easy to predict since such circumstances make stocks bad bets."
I absolutely agree with this approach. Statistics shows that glamour stocks are not necessarily good investment. Some research is presented on the Ben Felix YT channel particullary in those videos:
TLS is definitelly not perceive as highly grown company, is not popular either. In fact is very solid entity with reliable board and potential to generate a lot of cashe.
WoW I would never expect that any foreigner know anything about such a niche company from Poland. Nice to read your analyse. In This case the details metters a lot and I will tray to clarify some of them below.
We have got several important factors that affect previous operation results. It is important to know them to estimate comapny's potential correctly. First let take a look at the company in genaral:
There are three main segments in Telestrada operations.
The first is phone services that consits of 2 subsegments. Land-line phone services that decrease about 3-4% per quarter. According to the Q1 report there are about 12.5k active numbers. The rest is mobile phones mostly. They have low cost "LaitMobile" brand https://lajtmobile.pl. This part is increasing about 3-4% per quarter. The offer is currently very atracctive mainly becouse of the raising prices among comeptitiors. So, to sum it up - this segment is growing about 10-12percent per year. Number of cards is reportent monthly. There is stady incerease about 1%percent per month.
The second part is telko servies for prisoners. The brand here is WhitePhones https://whitephone.pl The company have kind of old school aparats in prison. Thats highly profitable segment. Becouse of TLS position the margin is very good. In this segmenet the top performance has been reached. There is no way to further increase the number of phone aparats in prision but there was some restrictictions impose on the prisoners by previous Polish governemt. So theoretically, some growth couse by the amount of phone calls or some pricing change is possible.
The last one are business services. They do some telko traffic management, call trees services etc. I am not able to estimate growth in this segment so I assume const results in my estimations
A few fact about the fine:
The fine was imposed by Polish UOKIK office in 2020yera. It was fully ecounted in 2020 results. There was a long legal process (some appeal )and the final setence was published at the beggining of this year. Now, the case is the past - that's no longer importent. It is not affect current results in any way.
"Also the company writes it made an investment of almost 10 million PLN in another listed company to avoid the fine."
That's a total misunderstending. There was a period with very low interest reate, acctualy everywhere around the world, so the comapny had 10milion PLN and a potential fine a copule of years ahead. Theere was a plan to inwest it in another company with ticker CPS. CPS stock prices decreased havely and it affected past company results.
Just take a look at the financial cost. That's a result of market cap reeavluation of CPS's stocks that TLS have. Now this tendency turned and CPS stock is rising, so the efect will be positive. The operation was taken not to avoid the fine but the resaon was simply related to capital allocation.
you can follow most of Polish companies results here:
https://www.biznesradar.pl/raporty-finansowe-rachunek-zyskow-i-strat/TELESTRADA
In 2023 there was no share repurchase - the reason for that was: liquidation of shares that are preciously boutht. Then at the beggining of 2024 they had sentence publication and just after that the repurchase process was finallized.
Another importent case is the company currently has its own office in Wrasaw and some lands where another one will be build
https://www.proconst.pl/realizacje/telestrada.html
In my own calculations, I assume that the comapny is currenntly able to earn 8-9milion. This year positive CPS reevaluation is very likelly. So at the net profit level even 10milion is possible. That is my estimation of repetative expected result . So the true forward PE is about 4-5.
Sorry for my English :)
Please let me know if you have any specific questions.
.
Thanks a lot for this comment with detailed research, it is very helpful for others. As everyone can see there is a lot to know with even the smallest companies, more than my superficial research will reveal. In my case I have many small positions in stocks with statistically favorable properties. I do research to check whether these statistical properties are real, for example the earnings and to avoid bankrupt companies and frauds. I also use research to avoid stocks with growth stories or potentially very favorable events that are easy to predict since such circumstances make stocks bad bets. Because I own so many different "hairy" stocks it won't move the needle much if I am wrong on one of them.
"I also use research to avoid stocks with growth stories or potentially very favorable events that are easy to predict since such circumstances make stocks bad bets."
I absolutely agree with this approach. Statistics shows that glamour stocks are not necessarily good investment. Some research is presented on the Ben Felix YT channel particullary in those videos:
https://www.youtube.com/watch?v=ZY_NFQNUr_k&t=1s
https://www.youtube.com/watch?v=UZnVt_CvL3k
TLS is definitelly not perceive as highly grown company, is not popular either. In fact is very solid entity with reliable board and potential to generate a lot of cashe.
btw. Which broker offers access to NC market?