Transgaz - Profit Up On Higher Volumes, Weakening RON

Transgaz - Instant Earnings Comment

Recommendation:  Under revision

Target price (12M): Under revision

 

 

• Transgaz reported Q3/19 earnings today, BMO. Taking into account that Q2 & Q3 are seasonally weak periods, net profit amounted to RON 29mn in the reported quarter. Domestic revenues rose 6% YoY on lower regulated tariff, but strong volume growth, while higher international revenues arrived on the back of RON depreciation (Transgaz receive these revenues in USD). Due to the restatement of the previous year’s results, we’ve changed some figures compared to our early comment.
• On the costs side, OPEX came in at RON 281mn (+6% YoY) in Q3/19. The Co. reported an EBIT of RON 30mn due to growing employee costs (+8% YoY) and technological consumption (+27% YoY). Taxes and state duties totalled RON 80mn in 9M/19 (+45% YoY), implying lower cost on this row for Q4.
• Bottom line: Transgaz recorded a net financial income of RON 4mn in Q3/19 vs RON 5mn in Q3/18. Tax expense was at RON 4mn. Transgaz reported a net profit of RON 29mn for Q3/19, up by nearly 50% on a yearly basis.
• Conference call will be held on 21/Nov at 3pm CET.
• The company has spent more than RON 600mn for CAPEX in the first nine months of 2019, which will very likely increase the Regulated Asset Base, taking into consideration by the regulator for 2021. Earnings are therefore expected to jump once BRUA pipelines (Phase I & Phase II) to be finalized. Phase I is scheduled to be finished by the end of 2020.

 

 

Gabor Bukta
analyst

CONCORDE SECURITIES LTD.

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