Sharelink Securities & Financial Services have revised their price target on Marfin Popular Bank (CPB) shares following the new guidance on the Group’s profitability targets stated by Management.
“Based on the view that the Group is able to achieve them, we have revised our forecasts for CPB for the period 2007-2009,” said Sharelink in an investment report dated January 18, 2007.
Sharelink have re-visited their assumptions on loans and deposits growth for the period, the income and costs estimates, as well as provision charges. The CAGR of loans and deposits for the period 2006-2009 are currently estimated at 18% and 13% compared with 15% and 10% before.
“We project profit after tax (PAT) and after minority rights of EUR360 mln, EUR 470m and EUR 600m for 2007, 2008 and 2009, compared with our previous estimates of EUR 359m, EUR 424m and EUR 496m, respectively. We also believe that the risk tob our earnings forecasts is on the upside.” “Based on our model, we currently forecast a RoE of 11.5%, 14.0% and 16.5% for 2007, 2008 and 2009, compared with our previous estimates of 11.4%, 12.7% and 13.8%, respectively,” said Sharelink analysts.
Regarding the cost to income ratio, Sharelink currently forecast it at 41.7%, 37.6% and 33.9% for 2007, 2008 and 2009, respectively, compared with 41.7%, 39.9% and 38.3% before. The provision charge to total gross loans is currently forecasted at 0.75%, 0.75% and 0.70% for 2007, 2008 and 2009, compared with our previous estimates of 0.75%, 0.70% and 0.65%, respectively.
Based on the above, Sharelink have raised their fundamental value on CPB at EUR 8.10/share from EUR 7.20/share before. The price target is currently set at EUR 9.60/share from EUR 9.10/share.
“Our price target is set at a premium to our fundamental value on the stock mainly to capture any revised profitability targets set by Management in the near future, the expected improvement in the stock’s liquidity relating to the enlarged investors’ base, and the recent M&A activity in the banking sectors of both Cyprus and Greece,” Sharelink analysts note.
Sharelink Research’s ratings are based on a 12-month rolling price target. A price target takes into account the fair/fundamental value of the stock, but also the economic conditions prevailing at the time, equity market conditions, relative valuations and specific issues relevant to the company and the sector.
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