Founded: 2003
Headquarter: Budapest, Hungary
Employees: Over 8,000
2023 Revenues: €5.1 BN (CHF 12.77 BN)
Stock Exchange: WIZZ.L

This low-cost airline defies its Western competitors. Unlimited flights for just €599 a year? That is the bold offer launched by Hungarian carrier Wizz Air this summer. Although its impact on revenues is believed to be "marginal" by Concorde analyst Gábor Bukta, the programme demonstrates the aggressive expansion strategy of the airline. After being founded in 2003, Wizz Air first grew fast in Eastern Europe – in particular Hungary, Poland, Romania and Ukraine – before significantly expanding its fleet and adding new destinations in Western Europe. Much of this latter growth took place during the pandemic, when its competitors were on the defensive. 

Listed on the London Stock Exchange since 2015, the carrier now serves nearly 200 destinations in 53 countries. "As an ultra low-cost airline, Wizz Air derives most of its revenues not from ticket sales but from the additional services it sells, such as extra baggage and in-flight catering," says Yi Zhong, an analyst with AlphaValue. For financial year 2023-2024, Wizz Air’s revenue surged 30.2% to almost €5.1 billion, with a net profit of €366 million. Passenger numbers also rose 21.4% to 62 million. This momentum is expected to continue. The company reported a record number of bookings in the summer of 2024, despite a period marked by reduced capacity. Wizz Air forecasts profits of between €500 million and €600 million for the next financial year.

However, the company faces a number of challenges. "The war in Ukraine has severely impacted Wizz Air’s revenue, and the airline has had to abandon several routes in Eastern Europe," Yi Zhong points out. Making matters worse, problems with the Pratt & Whitney geared turbofan engines on its Airbus A320neo aircraft have grounded 20% of its fleet, forcing the company to lease eight additional aircraft. Gábor Bukta estimates that this will cost around €100 million this year. Wizz Air is also facing stiff competition from Ryanair in Eastern Europe. "The two carriers are engaged in an all-out price war," Gábor Bukta says. He cites the example of Albania, where the simultaneous arrival of the two airlines in late 2023 led to 15% to 25% reductions in average ticket prices. 

Wizz Air is now looking eastward to secure future growth. "It has ordered a large fleet of A321XLRs, an aircraft capable of covering medium-haul flights," Yi Zhong says. The new fleet will operate out of the airline’s Abu Dhabi hub to serve southern and eastern Asia. In the spring of 2024, Wizz Air announced the opening of routes to India with tickets priced at less than €200. "Unlike traditional carriers, which operate these flights with double-aisle aircraft, the A321XLR is a single-aisle plane, which makes it more economical to operate," the analyst explains. Despite the company’s high debt, Gábor Bukta maintains his buy recommendation. He believes that the challenges it faces are already factored into the current share price, which he deems undervalued.

Founded: 1999
Headquarter: Poznań, Poland
Employees: 7,000
2023 Revenues: PLN 58.4 BN (CHF 12.77 BN)
Stock Exchange: ALE

Allegro, Poland’s e-commerce leader, has managed to hold its own against American giants. In the 2000s, Allegro pulled off a show of strength in Poland by outperforming eBay, the US competitor that had inspired it. The company managed to rally the country’s network of SMEs to sell their goods on its marketplace. On the back of this success, Allegro grew dramatically, to the point that in 2020, amid the pandemic, the firm went public on the Warsaw Stock Exchange. The stock rapidly took off to top the Polish WIG30 index, and the unicorn’s valuation surged from $11 billion to $19 billion in a single day.

In 2021, a new challenge arose with the arrival of another US giant, Amazon, on the Polish market. After the announcement, Allegro’s shares dipped temporarily. Yet, three years on, the company is holding up well. Its market share in Poland remains stable at around 45%, according to Morningstar analyst Sean Dunlop. In late September, he wrote, "We continue to view Allegro’s current price as an attractive entry point for investors seeking high-quality exposure to e-commerce." In addition to its online market-place, Allegro is diversifying into related sectors: advertising, delivery and online payments, thus bolstering its ecosystem. In 2022, the firm extended its influence outside Poland with the acquisitions of Slovakian logistics operator WeDo and Czech online retailer Mall Group. With these acquisition, Allegro extended its presence in the Czech Republic, Slovakia, Hungary, Slovenia and Croatia, increasing its reach by 39.7% to 19.6 million active buyers in 2023.

Founded: 1991
Headquarter: Gdańsk, Poland
Employees: 43,000
2023 Revenues: PLN 17.4 BN (CHF 3.8 BN)
Stock Exchange: LPP

The group owns several clothing brands, including the highly trendy Sinsay, and already operates in almost 30 countries. A ruffled floral dress for €15, a pair of black ankle boots for €30 or a navy blue striped blazer for €18. The cuts are simple, the style on trend, but not overstated. In Eastern Europe, the brand Sinsay enjoys a reputation comparable to that of H&M or Zara. It belongs to LPP, a group founded in Gdańsk in 1991. In the late 1990s, LPP began developing its own brands, such as Reserved and Cropp, and opened stores under these banners. In 2008, the group added House and Mohito to its portfolio by buying out a competitor. Sinsay rounded out the offering in 2013.

Today, LPP operates 2,275 stores in 27 countries as well as e-commerce platforms, giving it access to some 40 markets. For its financial year to end-January, the group posted 9.3% growth, for revenue of 17.4 billion złotys (3.8 billion Swiss francs). "Most of this growth came from the Sinsay brand, which targets a young audience with low-priced products," says Janusz Pieta, an analyst at mBank. Inspired by the model of fast-fashion pioneers such as Zara, "Sinsay watches market trends and quickly transforms them into affordable products," says Sylwia Jaskiewicz, an analyst at DM BOŚ. LPP plans to substantially increase its number of stores over the next few years, which Janusz Pieta labels an "aggressive expansion strategy". By 2026, the group hopes to operate 4,755 outlets, of which 3,248 will come under Sinsay. 

However, to meet those targets, LPP will have to overcome a significant obstacle. In early 2024, the US group Hindenburg Research published a report accusing LPP of continuing to operate secretly in Russia, despite the company’s announced withdrawal from the country when the war broke out in Ukraine. In June 2022, LPP said it had sold its Russian division, which accounted for a quarter of its sales, to a Dubai-based entity called Far East Services, presented as a Chinese consortium, for about $382 million. Hindenburg alleges that this entity is merely a shell, created the day before the announcement. The report also claims that former LPP stores in Moscow and St. Petersburg continue to sell its products, shipping them via Kazakhstan.

LPP’s share price plummeted 36% upon release of the report. "The situation has caused it to lose credibility with investors," Sylwia Jaskiewicz says. Eager to restore its image, the Polish firm is now focusing on other markets, particularly in Central and Southern Europe, setting Romania, Greece and Italy in its sights. Despite these challenges, Sylwia Jaskiewicz believes the company’s fundamentals remain healthy and maintains a buy recommendation. She also highlights the substantial savings achieved in the e-commerce segment.

Founded: 1990
Headquarter: Prague, Czech Republic
Employees: 7,563
2023 Revenues: CZK 36.2 BN (CHF 1.34 BN)
Stock Exchange: KONN

The renowned financial institution is fine-tuning its digital offering to strengthen its position on the local market. The third-largest bank in the Czech Republic, Komerční Banka has built a solid reputation as a specialist in retail banking and financial services for small businesses. Sixty percent owned by Société Générale, it has 1.7 million customers and customer deposits of over CZK 1 trillion. In 2020, the bank adopted an ambitious strategy to reduce the number of branches and transition to digital services by 2025.

This transformation aims not only to reduce costs, but also to increase revenue by selling more financial products, especially via its mobile app. These instruments are already popular among Czechs who want to maximise returns on their savings amid today’s low interest rates. In 2023, the volume of assets invested by Komerční Banka in mutual funds, pension funds and life insurance rose 16%. Deposits grew by 9.7% and loans by 5.5%. Most analysts have issued a buy recommendation, considering the bank’s fundamentals to be strong. The total capital ratio, which measures a bank’s reserves built up to guard against losses, reached 18.8%, well above the 8% legally required in the Czech Republic. Another plus for shareholders is the dividend of 82.66 Czech koruna per share, with an average yield of 11.4% over the last five years (between 5.97% and 15.3%).

Founded: 2008
Headquarter: Budapest, Hungary
Employees: 454
2023 Revenues: HUF 96 BN (CHF 225 M)
Stock Exchange: ALTEO

Hungary’s pioneer of green solutions has solid foundations for further growth. The flagship of Hungary’s energy sector, Alteo has made a name for itself in the energy transition field. The company has a diversified portfolio of assets, including solar and wind plants, as well as hydroelectric and biogas facilities. In 2023, it set up a virtual power plant integrating almost exclusively renewable sources – a first in Hungary. This innovation enables centralised and optimised coordination of several green energy production units, thereby enhancing grid flexibility. At the same time, Alteo is expanding its activities, notably through subsidiaries specialising in waste management and the supply of charging equipment for electric vehicles.

Despite the fall in energy prices in 2023, the Hungarian company managed to hold its own. In the first half of 2024, its consolidated EBITDA was down by 25% and its net profit by 50% compared with the first half of 2023, but this was due to an extraordinary 2022. At the beginning of September 2024, the company still had a liquidity cushion of 10.6 billion forints after the June dividend payments, allowing it to comfortably cover its short-term obligations. For now, Alteo remains a small-scale player still highly exposed to the Hungarian market, but with green energy gaining ground in the European energy mix, the company is well positioned to capture a share of this growth, thanks in particular to its leadership in integrated energy solutions. A stock to watch.