CEZ: primus inter pares (stays BUY)
In this valuation update, we reiterate our BUY recommendation on CEZ and increase our 12M price target (PT) to CZK 1,089/share (up from CZK 889), which offers 25% upside. Our PT hike stems mainly from the rallying power prices, which keep boosting the company’s highly visible earnings. This year alone, we estimate the EBITDA to grow 35% yoy, to CZK 85bn, and we believe our estimate is conservative, at the lower end of the company’s new guidance. With the last three German nuclear plants shutting down in December this year, high gas and coal prices, and the company’s credible targets for its 2022E and 2025E EBITDA, CEZ looks attractive to us, despite the stock price rally and its updated dividend policy cutting the payouts to 60-80% of the adjusted net earnings. In our view, the main downside risk for the equity story today is the state’s intervention in the power market, or related measures. However, considering this year’s approved budget and the steps taken by the Czech government so far, this risk remains muted for now, in our view. CEZ is trading at our 2022-24E EV/EBITDA of 6.8x, at attractive multiples, and its 2022E dividend guidance stands at a generous 6.4-7.1% dividend yield.CEZ Group is a dynamic, integrated electricity conglomerate based in the Czech Republic and with operations in a number of countries of Central and Southeastern Europe and Turkey. Co. is an international group consisting of nearly 120 companies, Czech and foreign. Co.'s primary activities involve the production and transmission of electricity through nuclear, coal-fired and hydro power stations; production and distribution of heat and processing of secondary products generated during the production of electricity and heat as well as coal mining. Co. has operating companies in Poland, Bulgaria, Romania, the Netherlands, Ireland, Germany, Hungary, Albania, Turkey, Serbia, and Slovakia.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.