Transgaz - Lower Tariff Defined Fragile Results
Transgaz - Instant Earnings Comment
Recommendation: Under revision
Target price (12M): Under revision
- Transgaz published its 3Q report today, before the bell. Briefly, revenues before balancing activities dropped by 9% YoY to RON 292mn in 3Q18. Poor figures stemmed from lower revenues from capacity booking and also from the lower transmitted capacities. International transmission activity, that is not a regulated business, earned RON 79mn in sales terms remained almost flat on a yearly comparison. EBITDA and operating profit plunged 14% and 36% YoY, respectively in 3Q. Net profit for the period came in at RON 20mn, down 40% YoY in 3Q18. (NTRL)
- Operating results and margins were disappointing, but we are not surprised due to (1) lower tariff defined by ANRE earlier and (2) seasonality. Total costs before balancing amounted to RON 272mn, down 1% YoY in Q3. As a result of this, EBITDA margin melted 2ppt YoY down to 23%, worst quarterly result since IPO.
- Bottom line: Net financial income could positively influence bottom line, but it was negligible compared to the aforementioned facts. Transgaz reached net profit of RON 20mn in 3Q18, a 42% YoY decline vs 3Q17. Due to worsening margins, Transgaz recorded EPS of RON 25 in 9M18 compared to EPS of RON 37 in 9M17.
- Other news: Transgaz has completed the agenda of the General Shareholders Meeting scheduled for December 3 with an item regarding the distribution of special dividends from the company’s reported results and cash accounts. Company has a free cash balance of RON 926mn as of 30 September 2018.
- Conference call will be held on 22 November at 3 p.m. CET time.
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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