The new target price is 19% higher compared with the fund’s latest market price of RON0.43 a share.
“We maintain our accumulate rating for Fondul Proprietatea shares, while adjusting the target price from the previous RON0.72 to RON0.51. This was arrived at after applying a 48% discount to the Fair Net Asset Value/share of RON0.98 derived from our conservative SOTP methodology,” Erste said in a report.
It said the decision regarding the fair discount for the fund’s shares considered the real liquidity in Fondul Proprietatea’s portfolio, which is “much weaker compared with that of a private equity fund.”
Fondul Proprietatea is effectively held captive by government-held unlisted companies, Erste said.
“The listing of Romgaz, Hidroelectrica and, to a lesser extent, Nuclearelectrica, is the key driver for a sustainable narrowing of the trading discount. Our view is that Romgaz’s investment story is attractive enough, even assuming the delayed convergence of the domestic gas price,” the report noted.
Fondul Proprietatea was set up in 2005 to compensate Romanians whose properties were seized during communism.
The fund has a share capital of RON13.77 billion lei, split into 13.77 billion shares with a face value of RON1. (EUR1=RON4.3532)