According to HN dialy, Czech Coal started officially to supply electricity to companies yesterday. Company plans to compete with CEZ not only in providing better services but also offering up to 10% lower price. Czech Coal owns brown coal mines in Northern Bohemia but doesn’t have its generation assets yet. Czech Coal buys majority of electricity from CEZ but also imports it from Poland. Nevertheless, the cross-border capacity from Poland to Czech Republic is fully used at the moment and building new power plants would take several years to complete we see the news as neutral for CEZ at the moment. Also, CEZ is already facing a competition from other market players such as E.ON, EdF (Prazska energetika) reflected in CEZ’s decreasing market share among the largest customer with the lowest margins. Note that, this however concerns electricity distribution and not generation and wholesale sales, which forms majority of CEZ’s value and where CEZ is expected to be increasing its market share due to the expected growth in electricity demand and planned generation capacities closure across the region. We therefore reiterate our Buy recommendation.