a vidíte, stačí srovnat telekomy podle dvou ukazatelů (PE a EV/EBITDA) a hned vam musi byt jasno, ze polskej je lepší;-) O tom, že polskej spolu s francouzskou matkou reportuje v poslednich kvartalech horši nez ocekavane vysledky a ze nas telecom ma jeste prostor v prodeji nemovitostí není ani slovo. Proste fondy KBC a CSOB maji TPSA a potrebuji vylezt z CT tak je tam takovéto tendencni doporucení...
We are downgrading our recommendation on Cesky Telecom from Hold to Sell.
CT now trades at 6.8x 2006E EBITDA, well above its regional peers MTELEKOM and TPSA, which trade at 5.1x and 5.7x respectively. After rising by 6% in the past month, the stock now offers 14% downside to our fair value of CZK 480 per share.
Dividend-related speculation will be limited from here on in. There has been fresh speculation that CT could raise dividends significantly, following a press interview with Mr Sedivý, CT CFO, where he mentioned that CT could load up its underlevered balance sheet with up to EUR 2bn of debt.
Our discussions with the company have confirmed that Mr Sedivý was referring to incremental debt capacity, given the existing balance sheet, but it is doubtful that the company would increase borrowing simply to raise dividends. Note that Czech law limits a company's dividend payout to 100% of its mother company's retained earnings. Taking our 2005 net profit forecast, CT will have a maximum CZK 16bn dividend capacity in 2006, which is still below our original base case scenario of CZK 18bn, or CZK 56 per share. We have therefore lowered our 2006 DPS forecast to CZK 48. Whilst we agree that CT has substantial capacity to gear up, in the absence of any attractive M&A opportunities, we see no catalyst for it to do so.
Although we reiterate our confidence in the quality of CT's management and its ability to steer the company, in our view, there is nothing in CT's operating fundamentals that warrant its premium of some 28% to its peers.
CT's fixed-line revenues are declining more rapidly than at MTEL or at TPSA, and with a 112% penetration rate, mobile growth contribution is substantially more muted. Furthermore, as we have discussed in previous reports, we believe that CT's margins are unsustainable and are forecasting EBITDA margins to contract from 47% in 2004 to 45.5% in 2006 and to 44% in
2007 before stabilising. At a 2005F and 2006F ROIC of 6.1% and 8.2% respectively, CT barely earns its WACC. Whilst gearing up the balance sheet would help, in our opinion, the potential gain offers insufficient incentive for investors to hold onto the shares at this level.
Given that we see limited catalysts going forward to drive further share price appreciation at CT, we would recommend taking profits. We recommend switching into TPSA, currently trading in-line with its sector peers, on a 2006F EV/EBITDA of 5.7 and 2006F P/E of 15x, and offering 9.8% upside to our estimated fair value of PLN 28 per share.
