Emax has reported signing a PLN 57.9m net contract with PSE (Polish Grid) via its subsidiary Winuel. The contract encompasses modernization of Emax’s proprietary system – SIRE – real time working IT system, balancing the energy demand and supply at the biggest commercial energy consumers. The system is to be upgraded in two centers – one that currently works, and the second, backup, recently built by PSE. The modernization part of the contract is to be conducted till 24th December 2007. The contract also encompasses three year maintenance.
We believe the news should have very strong positive trading impact. We believe the value of the contract should positively surprise the market. We were expecting the contract to reach some PLN 30m. At the same time having figures for 2006 onwards above consensus – revenues for 2006F at PLN 454.1m (up 19.8% y/y) and net income at PLN 25.1m (up 23% y/y) – we do not see reasons for upgrading our estimates. We reiterate our BUY rating for Emax, with a fair value estimate at PLN 143.0, offering some 10% upside.