MCI Capital Alternatywna Spólka Inwestycyjna S A : ASI – Noble Securities’ analytical report under the Stock Exchange Analytical Coverage Support Program

E x c h a n g e ' s A n a l i t i c a l C o v e r a g e S u p p o r t P r o g r a m m e	7TH OCT 2021

MCI Capital SA - value in IAI and Morele.net

In our opinion the very good results in the first half of the year still do not exhaust the potential for growth in the value of MCI's portfolio investments. In this context, investments in IAI and Morele.net come out to the top. The discount of the current price of MCI Capital shares to BV at the end of H1 amounts to around 35%. After updating our forecasts, we adjust our valuation of MCI Capital shares from 30.9 PLN to 41.2 PLN.

Very good first half of 2021

After a good Q1, in Q2 2021 the company generated investment earnings of PLN 310.1m vs PLN 13.2m a year earlier, EBIT of PLN 304.9m and net profit of PLN 430.6m. In total, for the entire H1 2021, earnings from investments amounted to PLN 355m and net profit to PLN 467m. Book value per share at the end of 2Q21 was PLN 34.7.

Shoper's IPO success will highlight IAI's value?

The great success of the IPO of Shoper, which successfully offered PLN 362m worth of existing shares with a valuation of 66x EV/EBITDA for 2020, shows that the Polish capital market is well mature for high valuations of such fast- growing entities. In our opinion, this will show the market the value embedded in MCI's largest portfolio investment, IAI, which posted higher financial results than Shopper in 2020 and in July this year began its international expansion with the acquisition of a controlling stake in Shoprenter, the Hungarian market leader. A simplified application of Shoper's current EV/EBITDA multiple to IAI's valuation in our view suggests that the value of the IAI package held by MCI alone exceeds the capitalization of MCI as a whole.

Record liquidity, looking for new investments

MCI takes advantage of the very good market conditions and systematically exits its investments. In 2021, exits amounted to 218 million PLN. On the other hand, the company, holding the record-breaking liquidity, which at the end of the year is to reach 1 billion PLN, prepares next large investments, although - as the management board admits - it is not easy due to high valuations.

Current price		22.5 zł
Valuation		41.2 zł
Upside/downside	83%
Market cap.		PLN 1 157m
Free float		22%
Avg. Vol. 6M		4 819
180%	MCI Capital	WIG
170%
160%
150%
140%
130%
120%
110%
100%
90%
80%
Oct-20Dec-20Feb-21Apr-21	Jun-21Aug-21Oct-21

Source: Bloomberg, Noble Securities

COMPANY PROFILE

MCI Capital is a one of the leading private equity fund in Central-Eastern Europe. Since 1999 group realised over 100 investment projects and finished over 58 exits. Assets under management are estimated over PLN 2B.

SHAREHOLDERS

Tomasz Czechowicz

77,7%

Risks for our forecasts and valuation

Others

22,3%

Main risk factors for our valuation are limited portfolio liquidity, high concentration of portfolio investments and the adopted valuation method for

Krzysztof Radojewski

certain portfolio companies.

Senior Analyst

Our valuation is equally based on NAV (PLN38.2/share) and peers valuation to the other PE funds (PLN44.3/share) and indicates present fair price at PLN41.2/share.

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PLN m	2019	2020	2021F	2022F
Investment profits	156	167	500	213
Net profit	113	127	603	194
NAV/share	24.0	27.8	38.2	41.4
P/E (x)	10.1	9.1	1.9	5.9
P/NAV (%)	93%	80%	58%	54%

Source: MCI Capital ASI (2019-20), Noble Securities (2021F-2022F)

The preparation of report was finalized on 07/10/2021 at 8:10 a.m.. The first publication took place on 07/10/2021 at 8:20 a.m.

NOBLE SECURITIES EQUITY RESEARCH REPORT 1

E x c h a n g e ' s A n a l i t i c a l C o v e r a g e S u p p o r t P r o g r a m m e

VALUATION

We calculated the value of one share of MCI Capital using Net Asset Value (NAV) method on the basis of book value of investment portfolio at the end of 2021 and peers valuation to the other few European PE companies. We give both methods equal weights.

In table below we present valuation summary:

Valuation summary	Weight (x)	Per share (PLN)		Previously (PLN)	change %
Net asset value (NAV)	0,50	38.2	27.9	37%
Peers	0,50	44.3	33.9	31%
Average valuation		41.2	30.9	33%
Current price		22.5	19.2	16%
Upside/downside		83%	61%
Source: Noble Securities

PEER VALUATION

Valuation of MCI Capital's assets is based on book value, which shall reflect fair value. We do not find

any arguments for the necessity of book value adjustment in our calculations. The discount in the

company's market valuation relative to book value has started to decrease slightly in recent quarters, which we attribute to profitable exits at valuations near or above book value. Also worth noting is the company's implementation of a dividend policy and first dividend payment in 2021. Below are the P/BV valuation ratios of selected European PE companies. The main difference between these companies and MCI Capital is their higher market capitalization. Based on the valuation ratios of European PE

companies, we value the company with the peer valuation method at PLN 44.3 per share (previously PLN 33.9).

	Company			Currency			Market cap (PLN m)		P/BV (x)	Div. yield
						2021
	3I GROUP PLC			PLN	64 948	1.3	3.1%
	GIMV NV			PLN	6 591	1.1	4.6%
	EURAZEO			PLN	29 205	1.2	2.0%
	DEUTSCHE BETEILIGUNGS AG			PLN	3 011	1.0	3.4%
	Mean							1.16
	MCI Capital			PLN	1 157	0.59	2.4%
	Premium/discount to mean (%)							-49%
	Implied fair value of MCI Capital			PLN			44.3
	Implied fair value of MCI Capital			PLN			44.3

Source: Bloomberg, Noble Securities, data on 06/10/2021 at 2:34 p.m.

NOBLE SECURITIES EQUITY RESEARCH REPORT 2

E x c h a n g e ' s A n a l i t i c a l C o v e r a g e S u p p o r t P r o g r a m m e

P&L (PLN m)	2019	2020	2021F	2022F
Investment management fees	na	na	36	32
Investment profits	156	167	500	213
Operating expenses	5	5	41	37
Other operating revenues and expenses	0	1	0	0
EBIT	151	164	495	208
Net financial income and expenses	-8	-8	-7	-7
Profit before taxation	143	156	488	201
Income tax	-29	-29	114	-7
Net profit	113	127	603	194
Source: MCI Capital ASI (2019, 2020), Noble Securities (forecasts, 2021F-2022F)
Balance sheet (PLN m)	2019	2020	2021F	2022F
Assets	1 527	1 695	2 213	2 379
Non-current assets	1 517	1 669	2 128	2 300
Investment certificates	1 511	1 662	2 126	2 298
Other non-current assets	6	7	2	2
Current assets	10	26	85	79
Cash and cash equivalents	8	23	25	19
Other current assets	2	2	60	60
Liabilities	1 527	1 695	2 213	2 379
Equity and liabilities	1 271	1 387	1 962	2 128
Equity	183	229	152	152
Non-current liabilities	77	96	96	96
Liabilities on bonds	105	133	13	13
Current liabilities	1	0	42	42
Liabilities on bonds	73	78	98	98
Liabilities on bills of exchange	25	49	49	49
Provisions	41	19	29	29
Other	7	10	20	20
Source: MCI Capital ASI (2019, 2020), Noble Securities (forecasts, 2021F-2022F)
Cash flow (PLN m)	2019	2020	2021F	2022F
CF from operating activities	138	15	36	28
CF from investment activities	0	0	0	0
CF from financial activities	-138	1	-34	-35
CF	1	15	2	-6
Cash at the beginning of the period	7	8	23	25
Cash at the end of the period	8	23	25	19
Source: MCI Capital ASI (2019, 2020), Noble Securities (forecasts, 2021F-2022F)
Selected indicators	2019	2020	2021F	2022F
Book value per share	24.01	27.77	38.15	41.38
Dividend per share	0.00	0.00	0.54	0.54
Net debt	135	141	150	156
Net debt/BV	11%	10%	8%	7%
Number of shares issued	53.0	50.0	51.4	51.4
P/BV	0.93	0.80	0.58	0.54
Source: MCI Capital ASI (2019, 2020), Noble Securities (forecasts, 2021F-2022F)

NOBLE SECURITIES EQUITY RESEARCH REPORT 3

E x c h a n g e ' s A n a l i t i c a l C o v e r a g e S u p p o r t P r o g r a m m e

LEGAL DISCLAIMER

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This analytical report, hereinafter referred to as the "Report", was prepared by Noble Securities S.A. ("NS") based in Warsaw.

The basis for the preparation of the Report were publicly available information known to the Analyst as at the date of preparing the Report, in particular information provided by the Issuer in current and periodic reports prepared as part of its disclosure obligations.

The Report only expresses the analyst's knowledge and views as at the date of its preparation.

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STRONG AND WEAKNESSES OF VALUATION METHODS APPLIED BY NS IN THE REPORT

The DCF (eng. discounted cash flow) method - is considered the methodologically most appropriate valuation technique and consists in discounting financial flows generated by the rated entity. Strengths of this method include taking into account all cash flows that flow in and out of the company and the cost of money over time. The disadvantages of the DCF valuation method are: a large number of assumptions and parameters that need to be estimated and the sensitivity of valuation to changes in these factors. A variation of this method is the discounted dividend method.

Peers valuation - is based on a comparison of valuation multipliers of companies in the industry in which the rated entity operates. This method very well reflects the current state of the market, requires fewer assumptions and is simpler to apply (relatively high availability of indicators for compared entities). Its disadvantages include high volatility related to price fluctuations and stock exchange indices (in the case of comparison to listed companies), subjectivism in the selection of a group of comparable companies and simplification of the company image leading to the omission of some important parameters (eg growth rate, corporate governance, non- operational assets , differences in accounting standards).

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NOBLE SECURITIES EQUITY RESEARCH REPORT 4

E x c h a n g e ' s A n a l i t i c a l C o v e r a g e S u p p o r t P r o g r a m m e

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FINAL REMARKS

Analyst preparing the Report: Krzysztof Radojewski

Date and time of completion of the Report: 07/10/2021 at 8.10 a.m.. Date and time of the first dissemination of the Report: 07/10/2021 at 8.20 a.m..

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				Recent research concerning MCI Capital S.A.
	Direction	na.	na.	na.	na.	na.
	Date	14/05/2021	11/12/2019	30/06/2020	12/03/2020	28.06.2019
	at 10:19 a.m.	at 11:50 a.m.	at 5:20 p.m.	at 4:08 p.m.	at 2:55 p.m.
	Stock price at the date of report	19.2	15.0	12.1	8.3	7.3
	Valuation per share	30.9	30.4	24.9	21.9	26.5
	WIG Index at the date of report	62 004.52	56 230.40	49 569.17	37 164.02	60187.43

NOBLE SECURITIES EQUITY RESEARCH REPORT 5