ROMGAZ - Stronger-than-expected FCF generation in Q1/21
o Romgaz reported Q1/21 net income of HUF 464mn on net sales RON 1.33bn. Sales
were more or less in line with our estimate but net income came in higher due to less than
expected costs. Upstream represented 935 of total revenue and 119% of consolidated net
income. Cash and cash equivalents were as of March 31, 2021 of RON 2.9bn, or RON 7.52
a share (representing 23% of mrk cap).
o Key positives:
1. Higher gas prices YoY were certainly supportive.
2. Romgaz’s market share in the Romanian gas market rose by 2.5% as
compared to the market share recorded in Q1/20.
3. Operating costs rose by only 3% YoY, less-than-expected driven by lower
windfall taxes (we note that we expect costs to grow faster in the rest of the
year.)
4. OCF amounted to RON 639nm compared to RON 510mn YoY as a result of
accelerated receivables collections, lower investments and operating expenses.
Cash capex significantly lagged behind both the quarterly budget and
investments made in the same period of last year. Meanwhile, W/C
management improved, giving a boost to FCF generation as well (RON 551mn
vs. RON 354mn YoY).
o Key negatives:
1. Gas production declined by almost 4% YoY vs. the expected increase of
around 10% for FY2021, weighting on revenue generation.
2. Electricity production was also down by 20% YoY resulting in a 20% decrease
in revenue and negative net income from electricity.
3. EBITDA margin decreased to 52% from 57% YoY mainly due to the decrease in
total revenue.
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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