Today’s ‘Puls Biznesu’ daily speculates that the State Treasury ministry would use KGHM as an investment vehicle for buying a minority (38.5 – 41.9%) stake in power generating plant PAK, from Polsat, for over USD 190m.
Our view: We might see a negative market impact of the news, which is a potential threat to dividend prospects for KGHM. Nevertheless, we view the likelihood of the actual transaction as small due to: i) the state still owns 50% stake in PAK, ii) there are two other candidates to buy the stake from Polsat, state controlled electricity distributors, iii) it would make hardly any sense for KGHM to buy a minority stake in the power station. We reiterate our Buy rating for the stock.