Bucharest Stock Exchange: Central counterparty front and centre (HOLD - transfer of coverage)
We transfer coverage of Bucharest Stock Exchange (BVB), set our price target (PT) at RON 28.2/share and, given the potential upside of c.14.1%, we recommend to HOLD the shares. We believe the investment in CCP.RO is likely to bear fruit but, taking into consideration the uncertainty over the investment, which should see its first revenues only in two years’ time, we suggest remaining on the sidelines for now. On the positive side, BVB has a very strong balance sheet, which allows for 100% payouts after legal reserves, but the dividend yield, in our view, is likely to remain below the yields offered by the other exchanges in our universe, for the foreseeable future, at least. On the other hand, Romania is still awaiting placement on the watch list for an upgrade to Emerging Markets (EMs) by the MSCI. Also, while we believe the Hidroelectrica IPO, which would support the placement strongly, should happen eventually, the likelihood of it materialising in the near future is low, due to the current political and economic circumstances, in our view.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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