The Czech Press Agency reports that the Finance Minister, Jiri Rusnok, has called a meeting of the National Property Fund (NPF) presidium for Wednesday, May 29, to discuss the valuation of the companies involved in energy-sector restructuring. The NPF, a state institution, is the majority stakeholder in CEZ and recently failed to approve an assets transfer between the state and CEZ at a CEZ EGM this past Monday. The minister has recently said that he expects that the NPF will approve the restructuring at CEZ at the company’s June 11 AGM. The stock could react positively to news of an AGM approval, but it is just one of several conditions to be implemented according to the sector plan.
Patria issued a new report on CEZ yesterday. We believe the likelihood of energy-sector restructuring as proposed by the government being successfully implemented is now less than 50%, though still far from insignificant. In the short term, we expect the increased volatility of CEZ stock, with strong resistance at the CZK 100 level. Our target price remains CZK 110 per share; we believe privatization-related news flow should be a catalyst for stock-price appreciation following the June general election.
(Jiri Soustruznik)