Fondul Proprietatea: Power lift (upgraded to BUY)
Fondul Proprietatea (FP, the Fund) has outperformed the market by 17% in the past 12 months, and returned close to 48% over the same period, including dividends. We believe the strong momentum has been sustained by: cash distributions; expectations of Hidroelectrica’s listing; and the improving profitability and valuation of Hidroelectrica, due to the rising power prices. Although the political landscape has changed and we are less convinced that Hidroelectrica’s listing could happen over the next 12 months, we remain confident that it is still on the cards, probably in 2023E. In the meantime, the cash distributions stream remains considerable (c.8% p.a. on average, disregarding any potential sale of assets). We expect the NAV to appreciate as we see upside in the valuation of Hidroelectrica in the current environment, and the discount should be reduced again, once the timing of the listing becomes clear. We have upgraded the Fund to BUY (from Hold) and set our 12M price target (PT) at RON 2.27share, implying 24% upside potential.
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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