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8/2/2019 RCI_TGN_Transgaz First Impression 4Q 2011
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First Impression Transgaz
February 15, 2012 Utilities/Romania
Rec. Susp. Surpassing expectations on lower than foreseen costs Price 14.02.12* 242.5000
Price target Suspended
Volatility risk medium
Year high/low 272.5000/171.0500
Currency RON
RON/EUR 4.35
GDR rate n.a.
Shares outstanding eoy inmn
11.77
Market capitalisation
(total shares) in EUR mn
656.7
Free float 11.5%
Free float in EUR mn 75.5
Avg. daily turnover(12 m) in EUR mn
0.10
Index BETI
ISIN code ROTGNTACNOR8
Bloomberg TGN RO
Reuters ROTGN.BX
www.transgaz.ro
153.90
173.90
193.90
213.90
233.90
253.90
273.90
293.90
3 4 5 6 7 8 9 10 11 12 1 2
TransgazBET Index
Source: Raiffeisen Capital&Investment
Analyst: Iuliana Mocanu, CFATel.: +40 21 306 - 1202e-mail: [email protected] by: Raiffeisen Capital&Investment Published by: Raiffeisen Centrobank,Disclosures: www.rcb.at, www.rciro.roSupervisory authority: Financial Market AuthorityRomanian Securities Commission (RO)* The indicated price is the last price as available at 6.30 AM on 15.02.12
• Lower than foreseen quantities transported• But significantly lower operating costs boosted net profit • New regulatory period starts mid 2012
Transgaz reported its preliminary 4Q 2011 results under Romanian Accounting Standards with anet profit above our forecast but close to consensus estimates.
Quantities came in below expectations: Due to the 25% rise in consumption reported by the
regulator for November we were expecting quantities transported over 4Q 2011 up 7.5% yoy.However, our estimate appears to have been too optimistic, the mild December weatherapparently diminished gas consumption. Overall quantities transported over 4Q stood at 42TWh, 6% below our estimates and only 1% higher yoy. FY 2011 quantities were 4% higher yoyat 136 TWh. The decrease was partially compensated by higher other income.
Operating costs lower than we expected: Material costs (incl. technological consumptionexpenses) were some 18% below our estimates and salaries were 10% smaller than our forecast.But the main difference came from third party expenses, representing mainly maintenance costs,
which were 47% lower than we expected. Third parties expenses for 2011 were almost flat yoy while we were expecting a 40% rise yoy, which seemed appropriate considering the company’sstatements and budget which saw a doubling of these expenses.
The decrease in costs placed the operating profit significantly above our forecast. Net profit forthe quarter reached RON 108 mn, up from our forecast of RON 61 mn.
Estimated dividend yield above 12%: FY 2011 net profit stood at RON 392 mn, up 4% yoy.Taking into account the budgeted 90% dividend pay-out ratio, we estimate a dividend per shareof RON 30, some 14% above our estimate and 4% higher yoy. Using yesterday’s closing pricethe dividend yield stands above 12%
We remind that mid 2012 starts the next regulatory period of five years and the parameters of the regulatory methodology follow to be renegotiated, including an estimate of operatingexpenses for the next five years.
Outlook and recommendation: Given that Raiffeisen Capital&Investment is the lead manager of the consortium in charge of the SPO for the 15% stake offered by the state, our recommendationand target price are suspended.
Transgaz 4Q 2011 results in RON mn 4Q 11 4Q 10 +/- % RCB est. +/- % Cons. +/- %
Turnover 408 397 2.6 420 -3.0 403 1.2
EBITDA 164 139 17.8 108 52.8 142 16.1
EBIT 127 104 21.7 69 82.9 105 20.8
Net profit a.m. 108 84 29.3 61 76.6 88 22.3
EPS 9.18 7.10 29.3 5.20 76.6 7.51 22.3
DPS 29.96 28.77 4.2 26.38 13.6 28.46 5.3
EBITDA margin 40.3% 35.1% 25.6% 35.2%
Source: Company, Raiffeisen Capital&Investment, Reuters
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Acknowledgements
Raiffeisen Centrobank AG Raiffeisen Capital&Investment SA
A-1015 Vienna, Tegetthoffstraße 1, Internet: http://www.rcb.at
011857 Bucharest, 15 Charles de Gaulle Square http://www.rciro.ro
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Ana Franin ext. [email protected]
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Hungary Tel.: +36/1484-0Levente Blahó ext. [email protected]
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Iuliana Mocanu (Head) ext. [email protected]
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Risk ratings: indicators of potential price fluctuations are: low, medium, high.Risk ratings take into account volatility. Fundamental criteria might lead to a change in the risk classification. Also, the classification may change over the course of time. Investment rating: Investment ratings are based on expected total return within a 12-month period from the date of the initial rating.Buy: Buy stocks are expected to have a total return of at least 15% (20% for shares with a high volatility risk) and are the most attractive stocks in our coverage universe on a 12month horizon.Hold: Hold stocks are expected to deliver a positive total return of up to 15% (20% for shares with a high volatility risk) within a 12-month period.Reduce: Reduce stocks are expected to achieve a negative total return up to -10% within a 12-month period.Sell: Sell stocks are expected to post a negative total return of more than -10% within a 12-month period.Price targets are determined by the fair value derived from a peer group comparison and/or our DCF model. Other fundamental factors (M&A activities, capital markets transactions,share buybacks, sector sentiment etc.) are taken into account as well. Upon the release of a research paper, investment ratings are determined by the ranges described above. Interimdeviations from the above mentioned ranges will not cause a change in the recommendation automatically but will become subject to review.This report has been prepared by Raiffeisen Capital&Investment for information purposes only. Maximum care has been taken to ensure that the information contained herein is not untrue, however, its complete accuracy or correctness cannot be guaranteed. This report is aimed solely at professional investors who are expected to make their own investment decisions without placing undue reliance on the information interpreted by Raiffeisen Capital&Investment, which under no circumstance accepts any responsibility for consequencesarising from the use of this report. This information may not be reproduced, transmitted or distributed (in whole or in part) by any other person. Unless otherwise stated, all views
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Due to its organisational structure Raiffeisen Capital&Investment has ensured that any improper influence on the way in which securities services are provided by RaiffeisenCapital&Investment is prevented. Raiffeisen Capital&Investment may have effected an own account transaction in any investment mentioned herein or related investments and or mayhave a position or holding in such investments as a result. Raiffeisen Capital&Investment may have been, or might be, acting as a manager or co-manager of a public offering of anysecurities mentioned in this report or in any related security. Save as otherwise stated, the indicated prices are the last prices as available at 6.30 AM on the business day followingthe respective indicated date. Indicated prices refer to the stock exchange according to the Bloomberg/Reuters code stated. This document does not constitute an offer or invitation tosubscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever.1. RCI or an affiliated company (individually or together) owns more than 5% of the issued share capital of the issuer.2. The issuer owns more than 5% of the issued share capital of RCI or an affiliated company.3. RCI or an affiliated company acts as a market maker (or specialist) or designated sponsor or stabilizing manager of the securities of the issuer.4. RCI or an affiliated company was a manager or co-manager of a public offering of securities of the issuer within the last 12 months.5. RCI or an affiliated company has agreed to render (and to receive compensation for) other investment banking services to the issuer within the last 12 months.6. The analyst owns securities of the issuer analysed by him.7. The analyst is on the Supervisory Board/Board of Directors of the issuer analysed by him.
8. The analyst has received or acquired securities of the issuer before launch of the public offering of such securities.9. The remuneration of the analyst is linked to investment banking services rendered by RCI or an affiliated company. Applicable disclosures: 5
