Telecoms, metal traders breathe life back into sluggish market
The week abounded in events, notably, Elektrim's rise after its subsidiary El-Net received the telecom license for Warsaw. Last Friday, Elektrim closed at zl. 53 a share, or 9.3% over the previous week end price.
"Elektrim has reached its high this week," said Pawel Zach, an analyst at Citibank (Poland). "This shows that investors are positive about the company."
Dampening any euphoria about the new license, however, was the question of the high fees accompanying it. Moreover, the Communications Ministry has indicated it wants to offer another license for a Warsaw telecom operator. "The question is whether it is worth it," said Zach about El-Net's $300 million license fee.
"More competition means a worse position for Telekomunikacja Polska (TPSA)," Zach said. "So far, TPSA's price has remained on the same level." On Friday, TPSA traded at zl. 24.9, the same price a week earlier, on June 2.
Another company that has a substantial telecom business, KGHM Polska Miedz, may expect a downgrade in recommendations from many analysts, according to Michal Mierzwa, a metal industry analyst at COK Banku Handlowego brokerage. The employees' lockout period will end in July, which means that they are free to buy and sell their shares on the public market. "The largest threat for investors is the possibility of 30 million free employee shares getting into the market," he said.
The total market value of the shares is zl. 700 million ($180 million). KGHM has 200 million shares outstanding, and a market value of about $1.16 billion. Half of the shares are owned by the state treasury.
The potential release of additional shares for public trading makes the company less attractive, not to mention low world prices for copper, which has only a temporary character, Mierzwa said. "The price of KGHM is going to fall, or at least it is not going to rise," he said. Over the week, the price of the company's stock increased 1.35%, closing at zl. 22.6. "At the other end of the spectrum from KGHM, there is Kety, a very good company that has recently been noticed by investors," Mierzwa said.
Aluminum producer Kety's shares rose by 11% over the week, closing at zl. 43.4.
Impexmetal was another large gainer last week. Shares in the metal trader closed 13% over the previous Friday's price. The price was spurred by the news that the company had finally reached an agreement with Bank Pekao to buy back a packet of put options for 7.4% in aluminum works Huta Konin. If the bank was holding the options, the company's debt would increase by 23.7% annually, the company announced. The company will pay zl. 45.1 million ($11.5 million) plus a zl. 2 million ($512,000) premium, and will maintain control of 87% of Huta Konin.
"A lack of such agreement had been keeping investors away for a long time," Mierzwa said. "The conditions for the company seem advantageous, but it probably will have to become the bank's customer."
He added that the fact that the company will maintain control over Huta Konin is positive and will allow the management to achieve its plans. "Investors have been interested in the stock for some time, although its capitalization is quite low and the results still not too good," Mierzwa said.
"Elektrim has reached its high this week," said Pawel Zach, an analyst at Citibank (Poland). "This shows that investors are positive about the company."
Dampening any euphoria about the new license, however, was the question of the high fees accompanying it. Moreover, the Communications Ministry has indicated it wants to offer another license for a Warsaw telecom operator. "The question is whether it is worth it," said Zach about El-Net's $300 million license fee.
"More competition means a worse position for Telekomunikacja Polska (TPSA)," Zach said. "So far, TPSA's price has remained on the same level." On Friday, TPSA traded at zl. 24.9, the same price a week earlier, on June 2.
Another company that has a substantial telecom business, KGHM Polska Miedz, may expect a downgrade in recommendations from many analysts, according to Michal Mierzwa, a metal industry analyst at COK Banku Handlowego brokerage. The employees' lockout period will end in July, which means that they are free to buy and sell their shares on the public market. "The largest threat for investors is the possibility of 30 million free employee shares getting into the market," he said.
The total market value of the shares is zl. 700 million ($180 million). KGHM has 200 million shares outstanding, and a market value of about $1.16 billion. Half of the shares are owned by the state treasury.
The potential release of additional shares for public trading makes the company less attractive, not to mention low world prices for copper, which has only a temporary character, Mierzwa said. "The price of KGHM is going to fall, or at least it is not going to rise," he said. Over the week, the price of the company's stock increased 1.35%, closing at zl. 22.6. "At the other end of the spectrum from KGHM, there is Kety, a very good company that has recently been noticed by investors," Mierzwa said.
Aluminum producer Kety's shares rose by 11% over the week, closing at zl. 43.4.
Impexmetal was another large gainer last week. Shares in the metal trader closed 13% over the previous Friday's price. The price was spurred by the news that the company had finally reached an agreement with Bank Pekao to buy back a packet of put options for 7.4% in aluminum works Huta Konin. If the bank was holding the options, the company's debt would increase by 23.7% annually, the company announced. The company will pay zl. 45.1 million ($11.5 million) plus a zl. 2 million ($512,000) premium, and will maintain control of 87% of Huta Konin.
"A lack of such agreement had been keeping investors away for a long time," Mierzwa said. "The conditions for the company seem advantageous, but it probably will have to become the bank's customer."
He added that the fact that the company will maintain control over Huta Konin is positive and will allow the management to achieve its plans. "Investors have been interested in the stock for some time, although its capitalization is quite low and the results still not too good," Mierzwa said.
