Tsokkos in share 3 mln buyback

A. Tsokkos Hotels Pcl (TSH) announced its intention to proceed with share buyback of up to 3 mln own shares at a maximum price of 18 cent per share for the period 2 –18 August 2006.

Following the announcement, Egnatia Financial Services said that in the event that all shares arising from the share buyback are cancelled by the Company, then this would have a positive impact on the Company’s per share data and price multiples.

Thus, assuming that the 3 mln shares are cancelled, EPS for our explicit forecasts would have an immaterial impact.

Specifically, for FY06 EPS would remain the same at 0.92 cent per share whilst for FY07 and FY08 EPS would be restated at 1.02 cent (vs. Egnatia’s previous estimate of 1.01 cent) and 1.27 cent per share (vs. previous estimate of 1.25 cent) respectively. Given this the valuation exercise would lead to an upgrade of Egnatia’s target price from CYP 0.145 per share to CYP 0.15 per share. Following the recent strong performance of the stock (+17% on the day), Egnatia remain cautious to change its Accumulate recommendation yet.