CEZ plans to spin-off heat-plant in Dvur Kralove with installed thermal capacity of 116 MW and electric capacity of 18.3 MW from its portfolio as it continues to concentrate on electricity sources. Heat-plant has been for sale for three years but no appropriate bids were submitted. However according to the latest news the sale should be finished by mid-year 2006 as 5 companies have already expressed their interest. Based on a similar sale in the 2003, we estimate CEZ’s proceeds to come at cCZK 180m or CZK30 per share.
Separately, CEZ plans to spend CZK 30m for new wind power plant close to Nachod which should replace the old one. The output should be increased from 1.6 MWh to 4 MWh and thus is only marginal for CEZ. We see both news as neutral for today’s trading with CEZ and reiterate our Buy recommendation with fair value of CZK 864.