Yesterday we increased our target price to CZK402 per share from CZK330 per share, and upgraded the stock to Buy from Hold based on revised projections. The higher fair value reflects our more optimistic view of CT's strong fundamentals and the likelihood of dividend payments above what would be allowed under the approved dividend policy.
Based on our analysis of the two possible privatization methods (a tender or the capital markets), the increasing likelihood of a capital markets transaction, and the estimate of the fair value of the company together with a relative comparison of CT's shares with its European peers, an investment into the stock offers an upside potential of at least 17%, thereby justifying our buy recommendation.
Tomas Gatek, Patria Finance