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Czech markets  |  November 29, 2012 07:40:03

CEZ: Worse target price, but still an interesting dividend stocks

Based on DCF valuation decrease the twelve month target price of CEZ shares from 902 CZK to 731, but after a recent slump recommendation is left at "accumulate". ČEZ is currently facing pressure not only due to lower electricity prices because of their mostly fixed costs for fuel, but also several specific problems. These include disputes with suppliers of brown coal, an investigation by the European Commission and the fight with the Albanian authorities.

These problems are, however, in our view, already included in the price of the. These are the estimates for next year traded at comparable companies and is estimated to offer more than 6.5% dividend yield.

The guide price reduction is due to lower coal prices expected due to the development of shale gas in the U.S. and the reduction in the estimated CO2 allowance prices due to political disagreement about correct functioning of this market. Also problems in Albania and CEZ expected sales of 800 MW capacity have a slightly negative impact, while mostly significant decrease in the risk-free rate of CR (lower yield government bonds) supports our appreciation. CEZ would benefit from the Czech Republic as a safe haven. Our estimate of the terminal value of the investment and then involves the completion of 2.3 GW capacity in Temelin.

ČEZ - Company information and advice accumulate

Temporary problems covering a solid cash flow

ČEZ lacks resources for short-term growth, but it is supported by solid cash flow and declining investment costs. We expect that its financial leverage in 2015 decreases from 2.1 times EBITDA towards 1.5 times EBITDA for the inclusion of a stable dividend payout ratio at 60% of net profit. Operating cash flow of the company should cover investment costs and a large portion of the dividends, even if that CEZ will begin in 2016-2017 to build another 2.3 GW capacity in NPP Temelín.Completion of new and retrofitovaných brown coal power plants (2015) and the expansion of the renewable sources are the medium for a company with growth factors.

ČEZ - comparison with competitors

More analysis of company shares, including the reasons why CEZ CEZ is still an interesting dividend company, visit the web Investment

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ČEZ: Horší cílová cena, ale stále zajímavá dividendová akcie

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