Sharelink Securities & Financial Services Research have upped its price target on the share price of Marfin Popular Bank to EUR 11 per share based on the information and guidance by MPB Management, and its view that the Group is able to achieve the promised profitability targets.
For 2007, 2008 and 2009 Sharelink Research currently project non interest income EUR541m, EUR 600m and EUR 703m from EUR 519m, EUR 547m and EUR 644m, before. The cost to income ratio is currently forecasted at 41.6%, 38.7% and 35.6% for 2007, 2008 and 2009, respectively, from 42.4%, 40.2% and 36.9% before.
“Based on our model, we currently project profit after tax and after minority rights of EUR 480m, EUR 602m and EUR 773m for 2007, 2008 and 2009, respectively (previously: EUR 464m, EUR 558m and EUR 717m). We also believe that the risk to our earnings forecasts is on the upside and gradual upgrades throughout the year should not be ruled-out.â€.
The RoE for 2007 is currently forecasted at 15.2% and at 13.7% when profits are adjusted for the one-off profit of EUR 50.0m on disposal of the Group’s holdings in Hellenic Bank and Universal Life (previously: 14.7% and 13.2%, respectively). The RoE for 2008 and 2009 is currently forecasted at 16.9% and 19.7%, respectively (previously: 15.7% and 18.5%). Based on the figures, Sharelink Research estimate an EPS CAGR of 26.9% for the period 2007-2009.
Following the change in estimates, Sharelink have revised the valuation on CPB to EUR 11.00/share from EUR 10.00/share before.  At EUR 11.00/share CPB would be trading at a 2007F P/B of 2.6x against an estimated 3.1x for 2007F, 2.8x for 2008F and 2.4x for 2009 for the Greek banking sector, which is the closest comparable to the Cypriot banks due to their increasing exposure to the Greek market. The estimated RoE of the Greek banking sector is 21.0%-23.0% for 2007F, 22.0%-24.0% for 2008F and 23.0%-25.0% for 2009F. On a P/E multiple basis, at EUR 11.00/share, CPB would be trading at a P/E multiple of 18.2x, 14.6x and 11.3x for 2007F, 2008F and 2009F, against an estimated 2007F P/E of 14x-16x, a 2008F P/E of 12x-14x and a 2009F P/E of 10x-12x for the Greek banking sector. “We believe that these are justified by CPB’s stronger earnings
momentum for the period 2007-09 (estimated CAGR of 26.9%) compared to an estimated 18-20% CAGR for the Greek banking sector,†concluded Sharelink Research in a report dated July 5, 2007.
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