The PX-50 index closed down 0.80% on Friday after profit taking from both domestic and internationals hit the market. Volume was strong at USD 65.78m with CEZ accounting for almost 50%. Cesky Telecom is proving to be highly sensitive to any news flow related to its privatisation; any comments denouncing a potential sale via the market push the stock strongly higher. At this point of time we believe the potential placement of the 51% stake is priced in and CZK 330 is likely to be the floor price ahead of the transaction. Certainly, placement would imply a discount on current market levels but we believe the appetite for the stock is strong. However, should there be no placement we expect a sharp upward rally as a number of large accounts are underweight, expecting to accumulate stock in the capital markets transaction. We continue to favour Cesky Telecom and advise BUY with a CZK 402 price target.
Milan Procházka, Patria Finance