Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2035 bonds and CZK1.0bn of 2043 floater. So far this year, MinFin has issued a total of CZK249.6bn CZGBs on the primary market (MinFin projects CZK270 370bn for the full year), as well as an additional CZK121.8bn on the secondary market. The issuance calendar for October indicates that CZK16.0bn will be sold on the primary market. However, the Ministry of Finance usually increases the amount issued compared to the amount indicated in the calendars, with the year-to-date total amount sold being roughly double the amount indicated. On Monday, the Czech government approved a state budget for 2027 with a deficit of CZK386bn, i.e. CZK3.0bn lower compared to the first draft of MinFin, which we analysed further in our special report: https://bit.ly/Budget_2027_EN. We estimate that this would lead to a widening of the total public finance deficit from 2.8% of GDP this year to 3.5% of GDP in 2027, intensifying the overall expansionary stance of the fiscal policy. Combined with other financing needs, we estimate that total gross CZGB issuance on financial markets will increase by around a quarter yoy in 2027.

Issuance activity: Tomorrow, MinFin is scheduled to auction CZK2.0bn of 2035 bonds and CZK1.0bn of 2043 floater. So far this year, MinFin has issued a total of CZK249.6bn CZGBs on the primary market (MinFin projects CZK270 370bn for the full year), as well as an additional CZK121.8bn on the secondary market. The issuance calendar for October indicates that CZK16.0bn will be sold on the primary market. However, the Ministry of Finance usually increases the amount issued compared to the amount indicated in the calendars, with the year-to-date total amount sold being roughly double the amount indicated. On Monday, the Czech government approved a state budget for 2027 with a deficit of CZK386bn, i.e. CZK3.0bn lower compared to the first draft of MinFin, which we analysed further in our special report: https://bit.ly/Budget_2027_EN. We estimate that this would lead to a widening of the total public finance deficit from 2.8% of GDP this year to 3.5% of GDP in 2027, intensifying the overall expansionary stance of the fiscal policy. Combined with other financing needs, we estimate that total gross CZGB issuance on financial markets will increase by around a quarter yoy in 2027.

Market situation: With the price of Brent crude oil back below 100 USD/bbl, bonds have rallied this week, erasing most of last week’s losses. Last Thursday, the CNB unanimously left rates unchanged, emphasising domestic factors which were, overall, less inflationary than in the last CNB forecast. At the press conference, it was noted that the main objective is now to reduce persistently high core inflation. Less emphasis was placed on factors related to developments in the external environment, such as energy commodity prices, foreign market rates, and monetary policy abroad. You can find out more about the CNB meeting here: https://bit.ly/CNB_Sep26_EN.

Rates outlook: Our baseline scenario still anticipates that the CNB repo rate will remain at its current level for an extended period. However, energy-related risks and a public finance deficit of 3.5% of GDP next year (compared to the CNB’s August forecast of 2.9%) are skewing the risk of the CNB tightening its monetary policy further. In any case, the market pricing of additional four hikes seems excessive.

Colt CZ reported yoy EBITDA growth of +119% for 2Q26. This exceeded the consensus estimate by a substantial +18.3%. The margin increased to 29.4% (+8.5pps). This substantial increase was driven by organic growth of +49% in 2Q26 and the consolidation of the high-margin company NCL. Furthermore, Colt has raised its full-year forecasts. We expect the consensus to rise.

Colt CZ reported yoy EBITDA growth of +119% for 2Q26. This exceeded the consensus estimate by a substantial +18.3%. The margin increased to 29.4% (+8.5pps). This substantial increase was driven by organic growth of +49% in 2Q26 and the consolidation of the high-margin company NCL. Furthermore, Colt has raised its full-year forecasts. We expect the consensus to rise.

Revenue for 2Q26 was CZK8.6bn, representing a yoy increase of +56%. The firearms segment grew by almost +53% yoy, accounting for 52.6% of total revenue. This significant increase was primarily driven by MLE deliveries. There was also positive growth in Colt CZ’s main firearms market in the United States (commercial). Overall, revenue in the United States grew by +11.4% qoq. The total number of firearms sold in 2Q26 reached almost 170,000, exceeding our estimates by +6.2%. This is likely due to a revival of the US commercial market. The ammunition segment accounted for 30.8% of revenue, growing by +4.9% yoy. This segment is traditionally very strong in Europe, where the company generates 83% of its ammunition revenue. Since the beginning of the year, the new energy materials segment (NCL) has accounted for 16.6% of total revenue. However, this segment has the highest margins by far. In 2Q26 alone, the EBITDA margin for NCL reached 56.7%. The ammunition sector's margin is 32.8%, while the firearm sector's is 18.8%. Total EBITDA for 2Q26 reached CZK2.5bn, an increase of +119 %yoy, and exceeded the market consensus by a substantial +18.3%. This strong yoy growth is driven by organic growth and, in particular, the consolidation of the acquired NCL. The EBITDA margin stands at 29.4%. This increase of +8.5pps yoy is due to the inclusion of NCL’s high-margin business. Organic EBITDA growth (excluding energy materials) was +49% yoy. This was driven by higher firearms sales (+27.4% yoy), a recovery in the US commercial market, and MLE deliveries in Europe, Canada, and Asia.

Net profit after minority interests for 2Q26 was CZK0.757bn (+62.2% yoy). However, adjusting this figure further for PPA — a non-cash accounting item relating to the acquisitions of S&B and NCL — brings the net profit up to CZK1.1bn (+79.5% yoy).

Leverage stood at 2.17x (net debt/EBITDA) in 1H26. This represents an increase from 1.8x at the end of 2025 (2.2x in 1Q26). Leverage rose due to the acquisition of NCL, which took place at the start of this year.

2026 Guidance: Colt has increased its targets for this year. EBITDA is now expected to reach CZK8.0–8.5bn, which is an increase of +3.7% (at the upper end) compared with the previous forecast of CZK7.4–8.2bn. The lower end of the revenue range has also been increased, from CZK30–33bn to CZK31–33bn. Colt should aim to reach the upper end of the target range. This would represent yoy growth of +82.4% and +41% for EBITDA and revenue respectively. The figures announced for the first half of 2026 represent 54.2% and 48.1% of the FY projections for EBITDA and revenue, respectively, compared with the upper end of Colt’s target. We expect market estimates to rise (CZK8.1bn EBITDA and CZK31.2bn revenue). Our estimates for this year are CZK7.7bn for EBITDA and CZK32.8bn for revenue.