CSG's stock market listing very successful, price may rise - analysts

Prague, Jan 23 (CTK) - The public offering of shares of arms company Czechoslovak Group (CSG), owned by entrepreneur Michal Strnad, on the Amsterdam stock exchange was very successful, and there can be further price increases, even though the price may be volatile in the coming days, analysts told CTK.

CSG shares rose by 29 percent to EUR32.20 per share today before 15:00 on their first day of trading on the Dutch stock exchange. In addition to Amsterdam, CSG shares are also traded on the Prague Stock Exchange (BCPP) on the unregulated Free Market, which is not the main market of the exchange. There, they firmed by 30 percent to CZK790 per share, according to the exchange's data.

"The CSG share offering has been very successful, at least based on the first hours of trading, and the domestic defence giant can look forward to a valuation approaching that of the symbol of the European arms industry, the German company Rheinmetall," J&T Bank analyst Stepan Hajek told CTK. According to him, it cannot be ruled out that the shares will continue to rise on the market, supported by the current geopolitical sentiment. "However, I would expect CSG shares to be highly volatile in the coming days," he added.

Shares of CSG are attractively valued up to around CZK800 per share, BHS analyst Timur Barotov said. According to him, buying shares at a higher price starts to become more speculative. "I'm certainly not saying the share price won't go higher, just that fundamentally it could start losing support the further the price rises above this level," he added.

"Investor appetite is considerable," Cyrrus analyst Tomas Pfeiler told CTK. Such a significant rise after the listing raises the question of whether the advisers set the share price too low, he said. Even though the shares jumped like this immediately after listing, buying them for a longer-term holding may make sense, he added.

According to Patria Finance analyst Tomas Vlk, the subscription price is a more complex issue. If the issuer sets the price too low, it will raise slightly less capital from the offering. However, this helps ensure the offering's success. By attracting strong demand, it can generate lasting interest in its shares and establish itself on the market as a growth stock. If the price is set too high at the offering, the shares would likely still be subscribed, but investor interest in the more expensive issue could wane in subsequent periods, he said.

CSG raised EUR3.8bn (CZK92.2bn) from the sale of shares on the Amsterdam stock exchange today, representing 15.2 percent of its share capital. The valuation of the group based on the final offer price of the shares reached EUR25bn (CZK607bn). The company offered EUR750m (CZK18.2bn) worth of new shares when it went public, EUR2.55bn (CZK61.9bn) worth of existing shares sold by the current shareholder, and an over-allotment option of up to EUR496m (CZK12bn).

CSG is one of Europe's leading manufacturers of artillery ammunition. The company expanded in this sector before the full Russian military invasion of Ukraine in 2022.

baf/er

CZ0009009718
NL0015073TS8