Příspěvky nebo odpovědi uživatele kldíek

This review of the value of Cesky Telecom's stock incorporates the company's 2005 results. We have upgraded our projection in light of the announced merger, since the company will profit from further synergies on both the revenue and opex side. The merger alone should lead to synergies of 8.4 bn CZK (26 CZK a share). The combined synergies - from the entry of a strategic investor, Telefonica, and from the merger - have an NPV of some 17.5-19.5 bn CZK (54-61 CZK a share).

We have also made a number of other important changes in our assumptions: firstly, we removed the extra 2.00% that we had conservatively added to the risk premium given the uncertainty about Telefonica's dividend policy and, more generally, its approach to minority shareholders. The new risk premium is 5.00% (vs. 7.00%), which, together with risk-free rate of 3.68%, means that we now use a required rate of return of 8.68%.

Secondly, we changed our long-term growth assumption for the stock. We now conservatively use a long-term growth factor of 0.00% (former 1.70%) as we believe that Cesky Telecom (CTel) will be able to pay out its strong free cash flows in the forecast period (2006-2011). And, in the long term (beyond the six-year forecast period), CTel should be able to pay out all its net income (forecast at some 40 CZK a share). This means we now assume a 100% long-term dividend pay-out ratio.

Since the stock is offering a high gross dividend yield of 8.7% (gross dividend of 45 CZK a share) and since we assume the company will continue to make dividend pay-outs (as there are no obvious acquisition targets), the stock should attract dividend-oriented investors in particular. We therefore see only limited risk on the downside. Telefonica may also seek to recoup its investment as soon as possible and may make an extra dividend pay-out in the future (earliest in the second part of the year). But from the conservative point of view we do not expect this possibility (extra dividend) to happen.

The appeal of dividend stocks rises as the record day nears. The record date could be already the 27 April, the date of the AGM at which the dividend will be approved. With that date approaching, we have upgraded the stock's short-term outlook to POSITIVE, from Neutral.

Our FCFE model returns a fair value of 577 CZK a share. This is already free of the gross dividend to be paid in 2006 (45 CZK). Our one-year target price is 627 CZK. This suggests the stock offers upside potential of 21.3%. We therefore reiterate our long-term BUY recommendation.

This review of the value of Cesky Telecom's stock incorporates the company's 2005 results. We have upgraded our projection in light of the announced merger, since the company will profit from further synergies on both the revenue and opex side. The merger alone should lead to synergies of 8.4 bn CZK (26 CZK a share). The combined synergies - from the entry of a strategic investor, Telefonica, and from the merger - have an NPV of some 17.5-19.5 bn CZK (54-61 CZK a share).

We have also made a number of other important changes in our assumptions: firstly, we removed the extra 2.00% that we had conservatively added to the risk premium given the uncertainty about Telefonica's dividend policy and, more generally, its approach to minority shareholders. The new risk premium is 5.00% (vs. 7.00%), which, together with risk-free rate of 3.68%, means that we now use a required rate of return of 8.68%.

Secondly, we changed our long-term growth assumption for the stock. We now conservatively use a long-term growth factor of 0.00% (former 1.70%) as we believe that Cesky Telecom (CTel) will be able to pay out its strong free cash flows in the forecast period (2006-2011). And, in the long term (beyond the six-year forecast period), CTel should be able to pay out all its net income (forecast at some 40 CZK a share). This means we now assume a 100% long-term dividend pay-out ratio.

Since the stock is offering a high gross dividend yield of 8.7% (gross dividend of 45 CZK a share) and since we assume the company will continue to make dividend pay-outs (as there are no obvious acquisition targets), the stock should attract dividend-oriented investors in particular. We therefore see only limited risk on the downside. Telefonica may also seek to recoup its investment as soon as possible and may make an extra dividend pay-out in the future (earliest in the second part of the year). But from the conservative point of view we do not expect this possibility (extra dividend) to happen.

The appeal of dividend stocks rises as the record day nears. The record date could be already the 27 April, the date of the AGM at which the dividend will be approved. With that date approaching, we have upgraded the stock's short-term outlook to POSITIVE, from Neutral.

Our FCFE model returns a fair value of 577 CZK a share. This is already free of the gross dividend to be paid in 2006 (45 CZK). Our one-year target price is 627 CZK. This suggests the stock offers upside potential of 21.3%. We therefore reiterate our long-term BUY recommendation.