CEZ expects its next year net profit to reach CZK 34bn (up 19.3% y/y), which is 10% below our estimate of CZK 37.5bn (31.2% y/y) and 7.7% below market Bloomberg IBES consensus of CZK 36.6bn (28.1% y/y). On the EBIT level, CEZ expects to reach CZK 47bn next year, which is 12% below our estimate of CZK 52.7bn (32.4% y/y) and 7.5% below market Bloomberg IBES consensus of CZK 50.5bn.
Our view:
Although the CEZ’s estimate is below our and market expectations, we believe this is a conservative forecast. In addition, CEZ’s has been historically gradually increasing its guidance for the full year result and therefore we believe that our forecast achievable. CEZ’s performance in 2007 will be driven by continued restructuring of the company (Vision 2008), integration and restructuring of foreign acquisitions and performance of the nuclear power plant Temelin. We reiterate our Buy recommendation and fair value of CZK 1,105.