Patria yesterday reiterated its 12M target price of CZK 955 and long-term recommendation to accumulate KB shares (short-term recommendation is hold). We see the recently approved guarantee is favorable for the bank, because it (i) makes KB privatization smoother, (ii) makes an attractive selling price more likely, and (iii) relieves KB of a certain amount of provisioning in the near term. Since we had expected a certain positive impact of the guarantees our projections of KB profits, and since we do not have any information that would make us be more bullish about this impact, we have left our projections (and investment recommendations) unchanged.
Finance minister Pavel Mertlik is quoted in Czech LN daily as saying that he expects the sale of KB to bring “significantly more” than CZK 45 bil. (the latter figure was reported two days ago as the upper end of the government’s estimate of KB privatization revenue). CZK 45 bil. for the 60% stake in KB implies a pre-share price of CZK 1,970. The market discounted the report of CZK 45 bil. expected revenues two days ago, and it is likely to discount also Mr. Mertlik’s comment today. P.Mertlik also suggested that the winner of the KB tender could be known as early as in March.