Romgaz - Earnings Revision
Recommendation: Neutral (prev. Accumulate)
Price target (12m): RON 31.3 (prev. RON 30.0)
Current share price: RON 31.4
Romgaz’s Q4 net income came in at RON 402 mn (-38% YoY) on sales revenue of RON 1.56 bn (+16% YoY), very much in line with our estimate. Q4 EBITDA amounted to RON 681 nm vs RON 639 mn in Q4/17, primarily driven by higher sales on flat production of 1.4 bcm of natural gas and rising gas prices.
In FY2018 Romgaz reported net income of RON 1.43 bn (-14% down on clean net income of RON 1.66 bn in 2017) on sales revenue of RON 5 bn (+9% YoY). Gas production rose 3.4% YoY which with higher gas prices drove upstream profit, while revenue from storage activities dropped by 41% YoY to RON 0.3 bn as a combined result of significant tariff cuts and higher storage volume turnover. Revenue from electricity sales also decreased by 31% YoY compared to the previous year due to improved hydro conditions resulting in lower need for swing electricity producers’ production.
Full-year EBITDA went down by 7% in 2018 from RON 2.42 bn to RON 2.25 bn under pressure coming from higher petroleum royalty expenses of RON 445 mn compared to RON 294 mn in 2017 due to the change in reference price calculation for royalty, as well as a 43% increase (RON 164 mn) in windfall tax and change in the accounting policy for exploration costs. Romgaz booked an impairment of RON 104 mn of a gas field and RON 54 mn impairment of assets representing current Iernut power plant, the latter was in preparation for termination of its activity possibly in 2020. Exploration expenses rose 104% YoY Also noteworthy was the fact, that the wages increased by 10.4% YoY ont he indexation of salaries to catch up with inflation and granting bonuses.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.