Komercni’s CEO Jan Vavra was reported as saying that the selling price for the state’s 60% stake in KB could be around CZK 40 bil. (vs. analysts’ estimate of CZK 25 bil.). A selling price of CZK 40 bil. implies CZK 1,750 per KB share; CZK 25 bil. would imply 1,100 CZK per share. We consider a selling price of some CZK 1,200-1,300 as achievable (including the control premium), but CZK 1,750 per share sounds excessively optimistic, in our view. A similar amount (in the CZK 35 bil.-45 bil. range) was expressed by Finance Minister Pavel Mertlik in December, though the market largely ignored the statement.
What might help the stock, rather, was the CEO’s indication of a better-than-expected result for last year (we expect a CZK 1 bil. loss). We believe that this could be achieved either through lower-than-expected provisioning (reflecting the recently approved state guarantees) or through tax relief (KB paid CZK 1.6 bil. tax on the one-off income from last year’s state bailout, but seeks to have sum redressed by the Finance Ministry). CEO Vavra also spoke about strong performance in terms of income from fees, but did not provide any details about the 2000 results. Preliminary 2000 figures are due to be released on February 28. Vavra also said KB wants to achieve 20-25% ROE in the next two years (we forecast 20% ROE in 2001 and 22% ROR in 2002). The stock closed slightly stronger on Thursday, and might benefit also today.
Komercni reduced personnel last year by 2,757; estimated personnel expenses should therefore decrease by about CZK 700 million.