According to today’s ‘Rzeczpospolita’ daily, the State Treasury Ministry is considering to propose KGHM buying a 25% stake in Polish Airlines LOT from Swissair receiver. The State, which owns a majority, 68% stake in the loss making national carrier, is looking for ways to inject more capital into the troubled, ‘high cost’ airlines. Meanwhile, it cannot decide choosing the new CEO for LOT. The management of KGHM, which had nothing to do with airlines business so far (apart from owning a corporate jet, perhaps) have not commented on the proposal, which is unofficial yet, while company unions have voiced their protest against the plan.
Our view: We might see some negative market impact on the back of the news today. We note that KGHM has become a usual candidate for queer investment ideas over the past few years, but majority of them ended in the paper bin. We reiterate our Buy rating for the stock.