Romgaz: More spend, less dividend (upgraded to HOLD)
We have upgraded Romgaz from Sell to HOLD, with an updated 12M price target (PT) of RON 30.6 (from RON 29.1), offering 8.1% upside. Romgaz has made a strategic shift from a high-income company to one that is targeting growth. We expect the annual investment expenditure to rise as Romgaz takes a position in deep offshore, expands its presence in the power generation business and diversifies into methanol. Romanian market regulation looks to be moving in the right direction at last, in our view, but a new offshore law is not yet in place. The market is also now connected to the greater EU market, bringing export opportunities and price risks. We expect a dividend yield averaging 6.3% for the next five years: not bad, but below the historical levels. We see Romgaz trading at 10.5x P/E for 2021E, below its peer group.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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