The Prague Stock Exchange contains several titles that could and should interest us. But if there is one that stands out above all others, it is CEZ. Moreover, this year's events have shot it to the unrivalled top position of the most frequently mentioned stocks and companies in our country. The giant remains at the centre of attention of fans and detractors alike. However, I would like to focus today's article on the problems the energy supplier has to face.

The Czech energy giant has been in the crosshairs of investors in recent years mainly because of its handsome performance and dividend. However, the majority owner is the state, which is a thorn in the side of many people who have been vocal about using the company's power to help citizens and solve the energy crisis. And that is what the state has decided to do.

The company's historic above-standard profits will also bring an above-standard dividend. It should receive a sum of about 35 billion. That should cover a significant part of the 66 billion set aside to help households fight high energy prices.

According to data available on the Internet, this year's dividend should amount to CZK 48 per share.

For the next few years, the estimates assume even more rapid growth. For 2023 it is CZK 71 and for 2024 it is CZK 103. Speculations have been running high, especially about the amount of this year's dividend, which according to some voices could be higher given the excellent results and low debt.

The remuneration paid to the company's board of directors has also become a target of criticism. All eight members shared 135 million crowns. The bonuses are paid according to the achievement of performance indicators. All members are entitled for the past year, as decided by the Supervisory Board. A political battle between Prime Minister Petr Fiala and former Prime Minister Andrej Babiš has raged around this.

Nationalization?

The pressure on CEZ is great. Understandably - the energy giant is pretty much on the chopping block in the energy crisis. Indeed, ideas have begun to emerge that in order to resolve the crisis and mitigate the impact of expensive energy, it might be possible to nationalise CEZ completely. A major obstacle would be that the state would have to pay a high premium to minority shareholders.

In addition, if a 100% state takeover were to take place, several other problems would arise. In particular, if energy prices were capped, the company would soon simply run out of funds and the financing of new nuclear units, for example, would stop.

Capping energy prices

Probably the most frequent topic in recent weeks has been the possible capping and regulation of energy prices, which are said to stop at 7-8 CZK/kWh. The average price last year was 5.80 CZK/kWh.

Price capping should also be introduced at the European level. Especially for RES. These are sources that make up a significant part of CEZ's energy mix. Apparently, a price cap of EUR 200/MWh is being discussed. According to Jan Raška of Fio banka, this would indicate that CEZ would sell its power electricity at a price of around EUR 130/MWh next year .

Windfall tax

The so-called sectoral tax has started to appear in the media quite often recently. Many member states have already introduced the tax and the Czech Republic is considering it as well. The problem is the very definition of unearned profits. It is also a bit of an understatement for the Czech capital market.

However, according to the latest information, the windfall tax might not be introduced. As Lukáš Kovanda describes in his article.

Explanation of windfall here:

https://www.youtube.com/watch?v=7jFd75_r2_k

What do you think is the biggest problem that CEZ is currently facing? Did I miss any? And are you investing in this energy company despite many unfavorable factors?

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Disclaimer: This is in no way an investment recommendation. This is purely my summary and analysis based on data from the internet and a few other analyses. Investing in the financial markets is risky and everyone should invest based on their own decisions. I am just an amateur sharing my opinions.