CSG shares down 7 pct in first month on stock market - analysts

Prague, Feb 23 (CTK) - Shares in Czech businessman Michal Strnad's arms group CSG are trading about 7 percent below the first day's closing price and 23 percent above the subscription price one month after the start of trading on the Dutch stock exchange, analysts polled by CTK said.

CSG shares are highly susceptible to the development of the geopolitical situation in the world, analysts say.

According to Cyrrus portfolio manager Tomas Pfeiler, trading can be described as quite successful. "The whole IPO was brilliantly timed in a week when geopolitical tensions were at their peak, in connection with Trump and Greenland. The stock then corrected because of the fact that the geopolitics calmed down a bit. However, new contracts announced by the company in recent days raise hopes that profitability will continue to grow," he added. Investor sentiment is also playing into the company's hands because of the escalation in US-Iran relations, Pfeiler said.

Over the month, CSG shares were traded in Amsterdam in a volume of EUR2.7bn (Kc65bn), while about Kc2.5bn worth of them was traded on the Prague Stock Exchange's Free Market, said XTB analyst Tomas Cverna.

CSG shares performed very well in the first month, but the vast majority of the growth is due to the IPO itself, noted J&T Investicni spolecnost portfolio manager Stepan Hajek. The dynamics of CSG are not fundamentally different from other European arms companies, he added.

In the short term, CSG stock could be vulnerable to corrections due to potential developments in Ukraine or a retreat in geopolitical threats, said Pfeiler. In the longer term, however, they should strengthen as European countries will spend more money on defence, he said.

CSG raised EUR3.8bn (CZK92.2bn) through the share sale, representing 15.2 percent of its share capital. Analysts said it was the largest-ever share subscription by an arms firm. The valuation of the group based on the final offer price of the shares reached EUR25bn (CZK607bn). The company intends to use the net proceeds from the sale of the new shares for its development.

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