Sharelink Securities & Financial Services Ltd., a member of SFS Group Pcl (SFS) has maintained its price target on the shares of Marfin Popular Bank at EUR9.60/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, a lower market risk premium as Cyprus approaches the adoption of the Euro in 2008, the further 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,†says Sharelink in a report issued February 12, 2007. Sharelink Research’s ratings are based on a 12-month rolling price target.
Sharelink’s through-the-cycle fundamental value on CPB is maintained at EUR8.10/share. This is the average outcome of the valuation methodologies used such as peer valuation multiple comparisons on P/E and P/B multiples and a dividend discount model (DDM). The EPS CAGR for 2007-2009 is estimated at 29.1%, the RoE for the period 2007- 2009 is estimated to be in the region of 11.5%-17.5%, the cost of equity is estimated at 10.2%, and the terminal growth rate is assumed at 3.5% (assumed to be higher than other local competitors due to the support of the group’s aggressive plans by the Dubai Fund).
It should be noted that currently the Sharelink profit estimates for 2007 and valuation of CPB do not incorporate an one-off profit before tax of EUR50.5 mln that will arise from the provisional agreements reached on 1 February 2007 for:
• The disposal of 17.4m shares (or 7.17% stake) and 3.3m warrants of Hellenic Bank Public Company Ltd (HB) for a total consideration of EUR62.2m to the Church of Cyprus. The agreement is subject to the approval of the relevant authorities and is expected to be finalized within the next three months.
• The disposal of 4.6m shares (or 35% stake) in Universal Life Insurance Public Co Ltd (UL) for a total consideration of EUR24.1m to MFS Holdings Public Co Ltd (MFS). The agreement is subject to the approval of the relevant authorities.
“Our profit projections for 2007 and valuation will be adjusted accordingly upon the finalization of the aforementioned agreements,†concludes Sharelink.
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