NY tech stock rally wins out over political difficulties
The Warsaw Stock Exchange (WSE) ignored the ongoing crisis in the governing coalition last week as tech stocks outperformed the market following the positive current account (C/A) data and the rally on New York's Nasdaq index.
The all-share WIG index climbed 8.1% on the week to close Friday at 19,851.5 points. Volume rose 8.9% to zl. 974.4 million ($221.5 million).
"The sentiment on Nasdaq and international markets was very good, resulting in a general market increase," said Andrzej Kasperek, an analyst at Erste Securities Polska. "The coalition worries were important but investors have gotten used to the situation and the better than expected C/A figure contributed to the rally." April's current account came in at $819 million, or 8.2% of gross domestic product (GDP).
Consequently, blue-chip information technology (IT) stocks showed steep price increases. Prokom shot up 31.1% to close at zl. 219 per share, while ComputerLand swelled 30.1% to zl. 121. And conglomerate Elektrim rose 22.3% to zl. 58.7 on speculation that it is interested in buying 66% of votes in Optimus (see related story, page 1). Optimus climbed 21.6% to zl. 194.5.
Notwithstanding investors' enthusiasm for tech firms last week, Prokom's rise was partially attributable to a zl. 207 million ($47.06 million) contract it won to upgrade Telekomunikacja Polska's (TPSA) accounting program. Kasperek said the deal will account for around 30% of Prokom's revenue this year. "That's quite a significant amount for them," he said.
Prokom has worked with TPSA since 1993 when it developed TPSA's original accounting system. Last year it won two contracts from the former telecom monopolist worth zl. 259 million ($66.4 million), checking its software for the Y2K problem. Michal Buczynski, an analyst at Centrum Operacji Kapitalowych Banku Handlowego, said that after fulfilling those obligations Prokom faced a hole in its revenue streams this year, but "this contract will fill that gap."
In related news, the second largest fixed-line telecom operator Netia, already listed on Nasdaq, announced last Friday the subscription price for its first Polish issue is set at zl. 110. Analysts recently estimated the stock to be worth zl. 110-zl. 120. When it debuts later this month, Netia will be the WSE's second largest telecom stock, behind TPSA, with a market capitalization of around $1 billion, analysts said.
Netia will issue 2.25 million shares, or a 7% stake, in the offering, while Netia's strategic investor, Sweden's Telia, will take another 2.25 million. A further 425,000 shares will go to Netia's management. Kasperek said that the proceeds from the offering will go towards rolling out Netia's national network for domestic long-distance services and also in the Warsaw area when it finally receives a license from the Communications Ministry to do so.
However, telecom and tech stocks did not completely hog the headlines. Continuing the recent trend of upcoming delistings, Germany's Holsten Brauerei called a public bid to up its stake to 100% in Koszalin-based brewer Brok, which is listed on the WSE's free market. If the bid is successful, Holsten will remove Brok from the stock exchange, said Pawel Zach, an analyst at Citibank (Poland). Holsten said it wished to pay zl. 42 per share for the stock, while Brok's yearly average price is zl. 25. Brok finished the week at zl. 41.5, rising 13.6%.
