Wood & Co. - ČEZ vydělá 9,5, Uni 9 Kč na emisních povolenkách

Event : The Czech government approved CO2 allocation plan yesterday.

Conclusion : We take positively that Czech companies may sell excess of rights at relatively high prices. CEZ and Unipetrol should benefit most. We estimate CZK 9.5 ps positive impact for CEZ and CZK 9 ps positive impact on Unipetrol. We believe that actual allocation did not change significantly compared to market expectation in CEZ case, however Unipetrol should benefit much more than originally expected (see the details below).

Recommendation: CZK 9.5 per CEZ share effect would increase our target price of CZK 585 by 1.6%.

CEZ Group gained 37.8mil tons (see table below). Assuming CEZ will consume on average 34mil tons in 2005-07, the difference of 4.68mil tons could be sold for EUR 113mil on the spot market each year. Assuming 25% corporate tax, the EUR 113mil annual sales for 2005-2007 represent positive impact of CZK 9.5 per CEZ share.

Unipetrol gained 6.6mil tons. Assuming the company will use an average of 5.5mil tons in 2005-07, the difference of 0.44 tons could be sold for EUR 10.5mil each year. This amount translates to a positive impact of CZK 9 per Unipetrol share.