Last year’s performance, when the fund’s shares rose by more than 50% is hard to repeat, analysts believe.
The year 2013 was the best year for Fondul Proprietatea’s shares since floatation on the Bucharest Stock Exchange on January 25, 2011. Ever since listing, the shares rose by 25% from RON0.6495 to RON0.814, mainly on the back of the 50% surge in 2013. The 25% yield generated by the fund’s shares since listing does not take into account the dividends paid. Adding the dividends, the yield is 42%.
Fondul Proprietatea has paid gross dividends of more than RON1.5 billion since listing and bought back more than 1.3 billion shares, which cost it more than RON1 billion.
Analysts do not expect the share price to hit RON1, but stay between RON0.8 and RON0.9. Looking at the latest price of 2013, RON0.8335/share, the rise should reach no more than 8% in 2014. Analysts see growth for Fondul Proprietatea shares in 2014 even though they did not have a good start of the year, dropping 2.4%.
“Fondul Proprietatea shares reaching RON1 this year is out of the question. Our target price for the end of the year is RON0.94 without taking cash disbursement into account. Adjusted for that, the target price is RON0.89,” said Daniela Mandru, analyst with brokerage firm Swiss Capital.
Iuliana Mocanu, head of the research department of Raiffeisen Capital& Investment, sees the price reaching RON0.9 by yearend. BCR’s head of research department Mihai Caruntu shares her opinion.
“After having gone up 50% in 2013, the growth potential of Fondul Proprietatea shares is limited in 2014. I expect it to range from RON0.8 to RON0.9, rising towards RON0.9 if share buybacks resume,” Caruntu said.
The main factor putting pressure on the price in 2014 is the foreign institutional investors’ temptation to sell in order to mark profits, because many of them bought into the fund at RON0.5, he added.
On the other hand, Marcel Murgoci, trading manager with brokerage firm Estinvest, expects 2014 to be as spectacular for the fund’s shares as 2013 was.
“I expect the discount to net asset value to drop to 10% in 2014 from the current 30%. A lower trading discount is one of the requirements US private equity firm Elliott, the largest shareholder, had for Franklin Templeton.”
Elliott asked manager Franklin Templeton to take steps to bring the discount down to about 15% in order to keep its manager term for two more years.
The main events that will influence the trend of Fondul Proprietatea shares this year will be repurchases, the cash disbursement and sales of assets. Another factor will be the initial public offerings of energy companies Hidroelectrica, Electrica and Complexul Energetic Oltenia, where the fund owns minority stakes. (EUR1=RON4.5379)
(English version by Loredana Fratila-Cristescu)