Fondul Proprietatea: A Holding worth HOLDing (HOLD - reinitiation of coverage)
Fondul Proprietatea (FP, the Fund) has outperformed the market by 15.4% in the past 12 months, and returned close to 40% over the same period, including dividends. It remains a very attractive play on the broader Romanian market, with optionality from divestments, which we believe should materialise in the medium to long term. At the same time, it remains one of the highest yielding assets, with the distributable cash (both dividends and buybacks) yield at 10% for this year and next, and 8% for 2021E, while also having a natural FX hedge. In the short term, however, we believe the catalysts for narrowing the discount to NAV, such as divestments, have a lesser chance of materialising, and we do not see much more room for a positive NAV revaluation, as we have a neutral view on power, oil and gas prices. We rate the Fund a HOLD, and set our 12M price target (PT) at RON 1.33/share, implying 11% potential upside.
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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