…Deutsche & Artion issue BOC buy tips
Equity prices on the Cyprus Stock Exchange roared to another record close, the highest for three-and-half years as the rally on the banking shares showed no signs of cooling down.
A powerful rally by the Laiki Bank shares on Tuesday, up by a whopping 4.97% to CYP 1.69, its highest since Aug. ‘01 was instrumental in pushing the main index higher, despite the moderate 0.43% gain staged by Bank of Cyprus, which was comfortable to play it in ranges around the closing price of CYP 2.34.
The BOC shares in Greece, which have been instrumental in driving local prices higher were also in a consolidation mood, ending Tuesday trading down by 1.45% at EUR 4.08 or CYP 2.34, closing the gap with the CSE. Volume on BOC shares in Greece was moderate compared to previous sessions, with 412.000 shares changing hands for a value of EUR 1.68 mln or CYP 962.000. Total volume on the CSE amounted to CYP 1.6 mln on 1067 trades.
The BOC close on the CSE at CYP 2.34 brought the weekly gains to 5.4% while since the start of the year, BOC shares are up 56.15%, which including the 4 cent dividend lifts the total gain to 58.2%.
The spectacular 4.97% advance in the Laiki Bank (CPB) shares on Tuesday to CYP 1.69 was instrumental in lifting the weekly gains to 10.5% and since the start of the year to 49.5%.
Traders told the Financial Mirror that the advance of CPB may be related to a planned rights issue, while others added, “Laiki is simply catching up with BOC.”
Hellenic Bank (HB) meanwhile closed at 55 cent bringing its year-to-date gains to 47.15%.
The powerful advance by the three banks helped lift the CSE GENX to a new 3 1/2 year record of 99.12 points, taking its year-to-date gains to 36.62%. The FTSE/CySE 20 large cap index ended at 500.54, while the CSE Main and Parallel index closed at a fresh record closing high of 1479.34 points, lifting its gains since the start of the year to 46.14%.
Buy recommendations
Traders are hoping that as the number of Greek analysts recommending the shares of BOC increases, so will the price. Last week Deutsche Bank
commenced its coverage of Bank of Cyprus shares with a buy recommendation and a market price of EUR 4.72 or CYP 2.70. The target price provides for a 22% upside potential based on current prices.
Deutsche Bank analysts note in their coverage, dated September 14, that they are bullish on BOC because of its reorganisation in Cyprus and its strong expansion in Greece.
The German investment banking giant notes that BOC presents an attractive valuation based on its growth potential during the next three years and forecasted average growth of 37% year-on-year.
Artion Securities of Greece commenced its coverage on BOC in a report dated September 20 with a buy recommendation and a price target of EUR 4.81 or CYP 2.75 per share based on the Bank’s above average forecasted growth rate in the next 2-3 years, which is also above the growth of Greek banks.
Technical break
The technical outlook remains bullish, and while the short term situation is heavily over-bought, the trend remains bullish. BOC, having breached the 2.10 level is on track to rally towards 2.54, the previous high since June ‘01.
CPB, which broke through 1.64 without any difficulty stopped Tuesday at 1.69, which is the high since August ‘01. A clear break above 1.69 should open the way for the next leg of the advance towards 2.15, the high since June ‘01.
The GENX on the on the other closed just a tick above 99.07, the high since Jan ‘03 and if it manages to break through the 100 barrier, then the way should be open for a powerful rally towards 112.20, the high since Nov. ‘02.
