Romgaz - Dividend Play Story Remains Intact
Romgaz: Earnings Revision
Rating: Accumulate (prev. Neutral)
12-m TP: RON 36.9 (prev. RON 37.1)
Current share price: RON 33.0
We expect Romgaz’s production to grow at 1% p.a. in the coming years. The new discovery on the Caragele field adds about 3pp extra to production volume, according to our estimate.
We reduce our clean EBITDA estimate from RON 2.46 bn to RON 2.20 bn at for 2020 mainly due to weak gas prices.
We cut our net income forecast for 2020 from RON 1.54 bn to RON 1.38 bn as well due to the weak gas price environment.
Romgaz’s organic CapEx coupled with its ambitious acquisition goals will likely have an effect on its dividend pay-out ratio in the future unless it moves towards a more optimal capital structure. Currently, there is no debt on Romgaz’s B/S, investments are financed from internally generated cash flows and from the National Investment Plan for the new power plant.
Concorde Securities Ltd. is Hungary’s leading independent company engaged in investment banking activities. It provides its clients with integrated financial services, including securities trading, research, corporate financing advisory, capital market transactions, wealth management and investment advisory. The operational management of the company is the responsibility of the CEO, while the owners/managers (who control one-third of the company through their shares and options) are in charge of its strategic governance. Concorde Securities Ltd. is a member of the Budapest, Frankfurt, Warsaw and Bucharest stock exchanges, as well as of the Hungarian Association of Investment Service Providers.
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