CFA equity research: CTT Correios de Portugal, S.A. equity valuation & the potential acquisition of Banco CTT: should Correios de Portugal divest its banking arm?

Abstract

CTT – Correios de Portugal, with over 500 years of history, operates in mail, parcels, financial services, and banking. As of 31/10/2024, its share price was €4.28. This paper estimates CTT’s fair value at €4.93, reflecting a 15% upside, through a sum of parts valuation of its Banking and Ex-Bank business units. The individual analysis evaluates the potential divestiture of Banco CTT, focusing on value creation through a private acquisition by a major bank. Findings suggest that a well executed divestiture could enhance Banco CTT’s value, allowing CTT to capture a premium and refocus on its logistics operations.