Czech Equity Daily: 22/12/2010: Philip Morris, Fortuna, CNB - rates, politics

...

Index PX: 1,214 points (up 1.2% d/d); volume: CZK 783m (USD 41m)

Market comment
Trading volumes stayed below CZK 1bn on the PSE yesterday but investors remained positive. The PX Index added 1.22%, driven by NWR with second-highest traded volumes after Komercni banka. The stock copied the mining sector, which is fuelled by growing commodity prices. The sentiment was also boosted by China's steps to support some of the EU countries. NWR grew by 3.1% to CZK 263 as the inflow of money in this stock continues. Almost a 3% gain was posted by Komercni banka, which followed its parent Société Générale. Erste Bank added 1.9% (CZK 870). CEZ stayed aside and closed at CZK 771. Telefónica O2 slightly weakened (-0.36%, CZK 387.1).

Philip Morris: Neutral/Positive (Analyst: Milan Vanicek)
According to euro.cz, Philip Morris CR is going to raise cigarette prices by CZK 2-4 per pack next year due to growing expenses, especially due to growing prices of tobacco, which more or less corresponds to increasing prices of agricultural commodities on world markets. The price hike should show up after sellers have sold out their current stocks, i.e. about one month after the hike – earlier that in the case of previous price increases after a tax hike due to the absence of stock-piling. According to available information, competitors are not raising their prices now, which could lower the competitive strength of PMCR in the short term, but they can be expected to do so owing to costs pressure. In addition, PMCR is considered price maker.
We expect that a slight raise in margins is incorporated in the given increase as margins have been decreasing for the past few years due to tax pressures. If competitors respond adequately, which means that there would not be a price battle that could lead to margin pressures, the news could be slightly positive.

Fortuna: Neutral (Analyst: Milan Lavicka)
Polish company BZ WBK AIB Asset Management held 3,632,047 shares of Fortuna as at 26 October 2010, said Fortuna in a press release. That represents a 6.98% stake, making the company the second largest shareholder of Fortuna.

CNB: Interest rates (2T repo)
eAFT: 0.75%, eMarket: 0.75%, previous (4 November): 0.75%

Politics – Government survives no-confidence vote (Analyst: Petr Sklenar)
The Czech government yesterday survived a vote of no confidence, initiated by the opposition, as all 113 coalition MPs attending were against the proposal while only 80 opposition MPs supported the proposal. The vote took place after the coalition parties reached an agreement with President Klaus on further steps regarding corruption investigation and the post of Police President.