Fondul Proprietatea: Renewables at a discount (HOLD - transfer of coverage)
Fondul Proprietatea (FP, the Fund) has outperformed the market by 25% in the past 12 months and returned close to 26% over the same period, including dividends. We believe that this performance was underpinned by the Fund’s cash distribution policy, supported by divestments and dividends from its portfolio companies, and also by expectations of Hidroelectrica’s IPO. We see the valuation of Hidroelectrica in FP’s NAV as conservative, given the full market liberalisation as of this year and the recent run in CO2 and power prices, and we believe that there is room for a NAV revaluation. Hidroelectrica represents c.54% of FP’s NAV, according to our estimates, and its potential listing by the end of 2021E/beginning of 2022E, doubled by the cash distribution policy, which we expect to continue unabated, should keep the discount to NAV low. We transfer coverage of the Fund and rate it a HOLD, setting our 12M price target (PT) at RON 1.71/share, implying 14% 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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