PPC’s expansion

Greek electricity utility Public Power Corporation (PPC) has earmarked 500 million euros for acquisitions abroad as part of a new five-year business plan. «PPC is in constant dialogue with a number of other potential strategic partners, who have expressed interest in collaborating with PPC to exploit additional opportunities in the region,» the utility said in a statement late Wednesday. PPC has repeatedly said it aims to expand into the neighboring Balkans, either through acquisitions, on its own or jointly with international firms in the face of rising competition in its domestic market. PPC expects a restructuring code-named «Project Heracles» to be launched next week, to add a total of about 2.2 billion euros to its core earnings over the next five years. The dominant power firm, 51 percent state-owned, plans to invest about 4.8 billion euros in the 2006-2010 period to upgrade its generation, distribution, mining and transmission operations. The strategy focuses on the better management of procurements, inventory and assets and in containing personnel and non-personnel costs. PPC shares were 2.33 percent firmer at 21.94 euros in early trade yesterday after hitting a fresh year-high of 21.96 euros earlier. «A united management team seems dedicated to turning around maybe the most promising restructuring case in the pan-European electrical utility business,» Alpha Finance wrote in a note. The stock trades between 24 and 25 times estimated 2006 earnings, a premium to Italian Enel’s price earnings ratio of 15 and German utility E.ON’s 15 times, according to Reuters Estimates. «Regulation and commitment on efficiency should underpin earnings and value momentum both in the short and long term,» Credit Suisse wrote in a note, raising its price target on PPC shares to 26 euros from 20 previously, and keeping its «outperform» rating. PPC also said it would assess the value of an option for a 30 percent stake in state-controlled gas company DEPA, which analysts said might lead to the utility’s diversification into the partially deregulated gas market. (Reuters)