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ZE PAK Gains as ING Raises Utility on Share Slump: Warsaw Mover

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July 23 (Bloomberg) -- ZE PAK SA, Poland’s fourth-largest publicly traded power company, rose the most in more than seven weeks as ING Groep NV upgraded the stock to hold after a slump.

The shares jumped 4.1 percent to 25.3 zloty at the close in Warsaw, the biggest advance since May 31. Poland sold its entire 50 percent stake in the utility’s initial public offering at 26.2 zloty a share last year to help finance the budget deficit.

“ZE PAK’s share price has fallen 20 percent over the past six months, along with falling electricity prices and due to the lack of a promised dividend,” Milena Olszewska, a Warsaw-based analyst at ING, wrote in a note yesterday. “With no more fundamental downside and with a new price target of 25 zloty, we upgrade our rating from sell to hold.”

The utility, controlled by Polish billionaire Zygmunt Solorz-Zak, had initially proposed a 30 percent payout from 2012 net income but its shareholders voted for no payment last month. Poland’s benchmark WIG 20 index has lost 9.9 percent this year.

In the same report, ING raised utilities in central and eastern Europe to neutral from underweight. CEZ AS and Enea SA remained ING’s top picks with buy ratings while Tauron Polska Energia SA was upgraded to hold and PGE SA was kept at hold.

“Although low electricity prices mean still some downside to the 2014 consensus, we believe this is largely factored into current share prices,” Olszewska said.

To contact the reporters on this story: Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net; Marta Waldoch in Warsaw at mwaldoch@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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