CEZ officially opened its subsidiary in Budapest on June 1. According to CEZ’s CEO, Martin Roman, the company follows its target to become the electricity leader in the CEE and SEE regions. CEZ may also seek to acquire generation assets in Hungary too. CEZ’s Hungarian branch already received the all needed licences and executed a first trade. From the beginning Hungarian office should focus on the domestic market and the cross boarder electricity trades. Note that electricity prices in Hungarya are c22% above domestic prices. CEZ is already active in Czech, Slovak, Germany, Poland, Romania, Bulgaria. We believe that expansion is positive especially in the light of the expected electricity demand growth on one hand and closure of generation assets on the other. We reiterate our Buy recommendation on CEZ.