Czech Hospodarske noviny business daily suggests today that CEZ’s preference for a strategic partner with a “positive attitude” to nuclear power and for the privatization of CEZ together with regional distributors to a single investor (expressed and approved at last week’s AGM) amounts to official government policy since Deputy Industry Minister Vorlicek (a member CEZ’s supervisory board) endorsed it. While we understand that the Ministry of Industry views on CEZ privatization are very close to that of CEZ, a principal agreement within the government still has not been reached (on timing, method, etc.). The Ministry of Finance is the other key decision maker involved, and its views on CEZ privatization differ from those of the Ministry of Industry. It is therefore premature to talk of the sale of CEZ and the distributors to a single investor as a done deal. This and related issues are still to be addressed by the Cabinet. The above-mentioned reports should not affect the stock today.
Separately, a referendum on the launch of CEZ’s Temelin nuclear plant has become an issue in Czech politics and the object of media attention. Although environmental groups and several politicians demand a referendum on Temelin, we do not consider this likely. Even in the unlikely event of a referendum, the outcome would likely be in favor of Temelin — opinion polls have suggested that a majority in the Czech Republic favor the plant. There will be more political noise surrounding Temelin in the coming days. At the same time, CEZ continues inserting nuclear fuel into Temelin's first block.
Our CEZ recommendation remains a buy.
(Ondřej Daťka)