Beruflich Dokumente
Kultur Dokumente
Transelectrica
from Accumulate to Buy
RON mn 2011 2012e Net sales 3,113.1 2,813.9 EBITDA 456.7 428.3 EBIT 159.5 109.1 Net result after min. 90.9 43.3 EPS (RON) 1.24 0.59 CEPS (RON) 5.93 4.43 BVPS (RON) 33.66 33.72 Div./share (RON) 1.10 0.53 EV/EBITDA (x) 4.2 4.0 P/E (x) 14.0 21.1 P/CE (x) 2.9 2.8 Dividend Yield 6.3% 4.3% Share price (RON) close as of 20/07/2012 Number of shares (mn) Market capitalization (RON mn / EUR mn) Enterprise value (RON mn / EUR mn)
2013e 2,681.9 514.3 171.3 116.9 1.60 6.24 34.52 0.80 3.4 7.8 2.0 6.4%
2014e 2,868.7 547.4 175.0 113.9 1.55 6.65 35.29 0.78 3.1 8.0 1.9 6.2% 12.5 73.3 913 / 199 1,721 / 375
22 21 20 19 18 17 16 15 14 13 12
52 weeks
Transelectrica
BET
Performance in RON
Reuters Bloomberg Div. Ex-date Target price
12M -41.7%
6M -31.9%
3M -16.7%
1M 0.8%
TSEL.BX Free float 27.8% TEL RO Shareholders MoEc (58.7%) 11/05/12 Fondul Proprietatea (13.5%) 15.2 Homepage: www.transelectrica.ro
We assigned a new target price of RON 15.2 (previously RON 19.5) for Transelectrica, raising our recommendation from Accumulate to Buy, as a direct consequence of the share price collapse this year (-30% YTD), which we believe has created an entry opportunity. We valued Romanians TSO at a 35% discount to its Regulated Asset Base (RAB) as of the end of 2012, which should be seen as sufficiently conservative. The much more indebted western peers are valued close to or even at a premium to their RAB, which should leave LT room for an improvement of Transelectricas valuation. The high regulatory risk perception and untransparent annual transmission tariff setting are the main explanations for such large trading discounts required by investors. We estimate that the regulatory risk might materialize as 25-30% lower average EBIT over the next regulatory period 2013-17. However, even in these circumstances, we see the operating profit as high enough to absorb the CAPEX needs without major pressure on indebtedness. The FY12 results will be weak, given the 5% contraction y/y of business in volume terms and the weaker LC against the EUR, but a substantial profitability recovery should be seen in 2013.
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Investment case
More than 30% lower average EBIT in 2008-12 as result of regulatory risk materializing The untransparent regulatory framework and atypical volatility of profitability are the main problems associated with investing in Transelectrica shares, especially for foreign investors, to whom the Romanian TSO looks like a risky stock. This explains why non-residents currently control less than one third of the companys free float. For a regulated utility like Transelectrica, the regulatory formula allows a controlled operating profitability determined as a product of the regulated return (7.5% in the period 2008-17) and the regulated asset base (RAB), excluding the impact of correction factors applied from one year to another during a five-year regulatory period. To be more explicit, Transelectrica should enjoy, on average, a controlled profitability equal to the regulated rate of return times the RAB. If the average EBIT during the five years is substantially lower than the average guaranteed profitability, this definitely reveals a materialization of the regulatory risk. According to our estimates, the average operating profitability over the period 2008-12 will be at least 30% lower than it would have been if the regulatory formula was correctly applied. Transelectrica officially confirmed that regulatory formula is not fairly applied Transelectrica explicitly recognized in July in an official report sent to the Bucharest Stock Exchange (BSE) that the National Regulatory Authority (ANRE) is not fully recognizing the expenses for own technological consumption and grid losses in the transmission tariff for the current regulatory period (2008-12), while the value of RAB does not include the effects of asset reevaluation as of the end of 2007. These implicitly resulted in a lower than justified transmission tariff approved by ANRE. On the other hand, simply keeping the same transmission tariff in 2011 and 2012 is a clear indication that the regulators decisions are arbitrary and unpredictable, with RAB-based methodology for computing the tariff not effectively applied. Specific profitability ratios
3.0 7.4% 2.5 2.11 5.5% 2.03 5.6% 5.7% 5.3% 5.1% 5% 1.5 1.02 3.6% 2.8% 2% 0.5 1% 0.0 2008 2009 2010 2011 2012e 2013e 2014e 2015e 2016e 2017e Source: Transelectrica, Erste Group Research 0% 1.37 3.7%1.33 1.42 1.47 1.31 1.23 3% 4% 2.69 Allowed return on RAB/EBIT EBIT/RAB (%) 6.1% 6% 7% 8%
2.0
1.0
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012 Despite some arguments that the regulatory risk will gradually fall and the tariff setting mechanism will become more transparent, our forecast scenario remains conservative for the next regulatory period 2013-18. We estimate over this period an average EBIT 25-30% lower than a fair EBIT resulting from an effective implementation of the transmission tariff methodology. Implementing extensive CAPEX plan of about EUR 775mn is needed; this fuels advance of RAB at CAGR of 5.5% in 2013-17, supporting profitability performance Even in these circumstances, we believe that operating profitability will be high enough to finance a CAPEX plan of about EUR 625mn in 2013-18, without putting pressure on debt sustainability indicators, which are currently at comfortable values. We believe that regulator ANRE is forced to approve a decent transmission tariff increase in the next five years. This is a must for Transelectrica to make the necessary capital expenditures in order to meet the objectives of the national energy strategy. There are three major targets of the CAPEX plan that cannot be put on hold: 1) strengthening the grid in order to integrate large-scale renewable resources of about 2,000 MW (there are already functional wind farms with an IC of about 1,200 MW); 2) reinforcing the grid through the restoration of the overhead lines and modernization of the electric stations built during 1960-80; 3) developing the interconnection capacities of the grid with neighboring countries in order to integrate the Romanian network into a regional grid in line with the strategic goal of the European Commission to build a European integrated power market. Transmission tariff development (y/y)
12%
Transmission tariff growth at CAGR of 4.2% in 2013-17 is sustainable to cover about 80% of CAPEX needs
10.4% 10%
8% 5.6% 5.5%
6%
5.4%
3.0%
2015e 2016e
2017e
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Remaining 20% of CAPEX plan may be financed via EU funds and government subsidies, lowering pressures on tariff growth
In the case of regulated utilities, the higher the CAPEX the better, if the methodology is correctly applied. Higher CAPEX should mean higher RAB and thus higher operating profitability. In other words, an extensive CAPEX plan is mandatory for a favorable advance of the transmission tariff so that the CAPEX effort can be covered via own sources, without inducing unsustainable pressure on indebtedness. The critical issue is the effective absorption capacity of such an advance of the tariff into the final regulated electricity price. Here, one has to consider the arbitrary decisions ANRE has made with the aim of keeping the power price as low as possible. In this context, the good news is that the CAPEX needs can be partly covered with EU funds, direct governmental subsidies and PPP (public private partnership), lessening the pressures on the transmission tariff. Our view is that, over the period 2013-18, Transelectrica will enjoy nonreimbursable external financing worth over EUR 150mn, which will add to the investment effort of about EUR 625mn covered via the transmission tariff. This year, Transelectrica announced the withdrawal of EU funds worth over EUR 20mn in order to rehabilitate two power stations. In this context, we considered for the period 2013-18 an annualized growth of the transmission tariff of 4.2%, compared to 4.7% in the previous regulatory period 2008-12, which is far from an optimistic forecast. Financial strength ratios
2.5 2.0
Credit risk metrics should remain comfortable, boosting profitability enough to substantially cover CAPEX plan
1.5 1.0
0.5 27% 0.0 2008 2009 2010 2011 2012e 2013e 2014e 2015e 2016e 2017e 27%
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012 In spite of regulatory risk materialization, Transelectricas indebtedness is much reduced compared to western peers Under the above-described transmission tariff and CAPEX plan development scenario, operating profitability will be high enough to comfortably cover the debt service. In terms of electricity consumption, we worked with an advance of at maximum 2.5% per year starting with 2013, which is the most conservative scenario presented in the companys last business plan. As can be seen in the chart below, an important strength of Transelectrica is that the values of the debt sustainability indicators are much more comfortable than those of its western peers. In spite of this, Transelectrica is traded at a 40% discount to its RAB as of the end of 2011, in contrast with its peers, which are traded at least at their RAB. This situation leaves enough room for improving Transelectricas valuation in the medium/LT, if the regulatory risk perception gradually improves and the profitability outlook becomes more predictable. Regulated utility valuation vs. indebtedness
1.6 1.4 National Grid (UK / USA) Terna (Italy) Elia (Belgium / Germany) Snam Rete Gas (Spain) REN (Portugal) Transelectrica (Romania) Federal Grid Company (Russia) Net Debt / EBITDA 2011 0.0 1.0 2.0 3.0 4.0 5.0 6.0
EV/RAB 2011
Transelectrica seems traded at exaggerated discount vs. its highly leveraged peers from Spain, Italy and Portugal
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
RAS (RON mn) Transmission tariff (RON/MWh) Distributed & transmitted electricity (TWh) Transmission revenues EBITDA EBIT Financial result Gross profit Net profit Source: Transelectrica, Erste Group Research
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Transmission service is the main profitability driver for Transelectrica, while the functional system services have a marginal contribution to profitability. The gross profit from functional system services will account for a maximum 5% of the gross profit from transmission services in the next regulatory period 2013-17. The other services are set using pass-through logic without any contribution to profitability. Gross margin from transmission services (%)
Gross margin transmission services (%) Transmission revenues growth (%)
76% 75% 74% 73% 72% 71% 70% 69% 68% 67% 66% 2008 2009 2010
15%
10%
5%
0%
-5%
The main expense category is represented by grid losses and own technological consumption, which are covered directly via transmission revenues. Considering the expected substantial pressures on the electricity price in Romania, we are rather pessimistic regarding the development of this expense category as a percentage of transmission revenues.
Erste Group Research Company Report 24 July 2012 Page 7
Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012 The other two important items with an impact on operating profitability are maintenance and personnel expenses, which on the contrary will have a favorable development up to 2017, as a percentage of the gross profit from the transmission and functional services. Key expense ratios (%)
Grid losses and ow n technological consumption/Transmission revenues (%) Personnel expenses/Gross profit from transmission & functional system services (%) Maintenance expenses/Gross profit from transmission and functional system services (%)
28% 26% 24% 22% 20% 18% 16% 14% 12% 2008 2009 2010
2011
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
WACC calculation
2013e Risk free rate Equity risk premium Beta Cost of equity Cost of debt Effective tax rate After-tax cost of debt Equity weight WACC 6.6% 7.2% 1.3 15.8% 7.6% 25.0% 5.7% 50% 10.8% 2014e 6.6% 7.2% 1.3 15.8% 7.6% 25.0% 5.7% 50% 10.8% 2015e 6.6% 7.2% 1.3 15.8% 7.6% 25.0% 5.7% 50% 10.8% 2016e 6.6% 7.2% 1.3 15.8% 7.6% 25.0% 5.7% 50% 10.8% 2017e 6.6% 7.2% 1.3 15.8% 7.6% 25.0% 5.7% 50% 10.8% 2018e(TV) 5.0% 6.7% 1.0 11.7% 5.5% 20.0% 4.4% 45% 7.7%
DCF valuation
(RON mn) Sales growth EBIT EBIT margin Tax rate Taxes on EBIT NOPLAT + Depreciation Capital expenditures / Depreciation +/- Change in working capital Chg. working capital / chg. Sales - Capital expenditures Free cash flow to the firm Terminal value growth Terminal value Discounted free cash flow - Dec 31 2012 Enterprise value - Dec 31 2012 Minorities Non-operating assets Net debt Other adjustments Equity value - Dec 31 2012 Number of shares outstanding (mn) Cost of equity Fair value per share (RON) 2013e -4.6% 171.3 6.3% 25.0% -42.8 128.5 343.0 160.3% -101.2 77.5% -550.0 -179.7 2014e 6.9% 175.0 6.0% 25.0% -43.8 131.3 372.3 147.7% 128.9 68.5% -550.0 82.5 2015e 5.9% 178.5 5.8% 25.0% -44.6 133.9 394.0 139.6% 17.4 10.1% -550.0 -4.7 2016e 6.5% 211.0 6.4% 25.0% -52.8 158.3 420.3 130.9% -66.4 -33.0% -550.0 -37.8 2017e 6.7% 236.1 6.7% 25.0% -59.0 177.1 446.6 123.2% 11.6 5.3% -550.0 85.3 2018e(TV) 3.0% 234.7 6.5% 20.0% -46.9 187.8 445.0 100.0% -4.7 -4.5% -445.0 183.0 2% 3,297.0 1,939.6
-162.3 1,867.2 0.0 0.0 808.8 0.0 1,058.4 73.3 15.8% 15.7
67.2
-3.5
-25.2
51.2
Terminal value EBIT margin 16 6.7% 7.2% 7.7% 8.2% 8.7% 16 6.7% 7.2% 7.7% 8.2% 8.7% 5.5% 16.4 13.5 11.2 9.2 7.5 1.0% 15.7 13.4 11.4 9.7 8.2 6.0% 19.2 16.0 13.5 11.3 9.5 6.5% 21.9 18.5 15.7 13.4 11.4 7.0% 24.7 21.0 18.0 15.5 13.3 2.5% 26.1 21.9 18.5 15.7 13.4 7.5% 27.4 23.5 20.3 17.6 15.3 3.0% 31.5 26.1 21.9 18.5 15.7
WACC
Terminal value growth 1.5% 2.0% 18.5 21.9 15.7 18.5 15.7 13.4 11.4 13.4 9.7 11.4
WACC
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012 RAB-based valuation We achieved target price of RON 15.2 by applying tough 35% discount to RAB 2012, which we believe has priced in current regulatory risk perception; recommendation is Buy We derived a target price of RON 15.2, considering it fair that Transelectrica is valued at a 35% discount to its RAB as of the end of 2012. Considering the specific regulatory framework, EV/RAB is usually used as a key multiple in the valuation of regulated utilities. We see this discount as high enough to price in the regulatory risk profile and the untransparent annual tariff setting mechanism, which negatively impacted the transmission tariff and profitability development during the second regulatory period 2008-12. Even in these circumstances, the values of debt sustainability indicators of the Romanian TSO are much more comfortable compared to those of its western peers, which are valued at least at the value of their RAB. That is why a fair discount of 35% should be seen as conservative enough from a medium and LT perspective. In these circumstances, we believe that the roughly 30% share price slump YTD has created an entry opportunity for this company, which should stabilize its corporate profile during the coming regulatory period 2013-17.
RAB-based valuation
Transelectrica RAB (Dec 31, 2012) Discount on RAB (related to EV/RAB=1) Enterprise value Net debt (Dec 31, 2012) Equity Value Number of shares Target price (RON/share) Stock price (RON/share) Upside potential (%) Source: Erste Group Research
RON mn
2,958 -35% 1,922 808.8 1,114 73.30 15.2 12.45 22.0%
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Com pany Elia system Operator Red Electrica de Espana Terna Federal Grid Company Snam Rete Gas National Grid Median peer group Transelectrica
EV/RAB 2011 0.94 n.a. 1.16 0.57 1.06 1.39 0.91 1.00 0.61 2011
EV/EBITDA 2012e 9.6 7.3 8.4 5.7 8.9 8.6 5.5 8.4 4.0 -52% 2013e 9.3 7.0 8.4 4.2 8.7 8.5 5.4 8.4 3.4 -60% 2011 14.1 9.7 13.9 13.6 11.6 12.8 8.7 12.8 14.0 10% 9.7 7.5 8.4 6.2 8.9 8.7 6.2 8.4 4.2
PE 2012e 13.9 8.9 12.9 10.5 11.6 11.9 7.4 11.6 21.1 82% 2013e 12.6 8.5 12.3 6.9 11.3 11.6 7.0 11.3 7.8
Dividend yield 2012e 4.7% 7.1% 7.0% 13.8% 7.7% 6.2% 8.5% 7.1% 4.3% 2013e 4.9% 7.6% 7.0% 1.6% 8.0% 6.4% 8.5% 7.0% 6.4%
Net debt/EBITDA 2011 5.6 3.9 4.2 1.0 4.3 3.9 4.9 4.2 1.5 -
Premium/discount to peers -39% -50% Source: Erste Group Research, Fact Set, Company website
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Income Statement
(RAS, RON mn, 31/12)
2009
31/12/2009
2010
31/12/2010
2011
31/12/2011
2012e
31/12/2012
2013e
31/12/2013
2014e
31/12/2014
Net sales Invent. changes + capitalized costs Total revenues Other operating revenues Material costs Personnel costs Other operating expenses EBITDA Depreciation/amortization EBIT Financial result Extraordinary result EBT Income taxes Result from discontinued operations Minorities and cost of hybrid capital Net result after minorities
2,485.13 0.00 2,485.13 32.61 -2,006.57 -145.70 -15.14 350.32 -250.30 100.03 -83.12 -5.65 11.26 -5.12 0.00 0.00 6.14
2,545.72 0.00 2,545.72 37.21 -2,018.07 -146.99 -67.38 350.49 -270.94 79.55 -56.88 -0.94 21.74 -12.18 0.00 0.00 9.56
3,113.14 0.00 3,113.14 38.65 -2,463.41 -152.73 -78.92 456.73 -297.26 159.47 -32.46 -0.01 127.00 -36.09 0.00 0.00 90.91
2,813.87 0.00 2,813.87 40.08 -2,242.63 -160.67 -22.39 428.26 -319.20 109.06 -51.26 0.00 57.79 -14.45 0.00 0.00 43.34
2,681.95 0.00 2,681.95 41.48 -2,020.86 -165.10 -23.18 514.29 -343.00 171.29 -15.38 0.00 155.91 -38.98 0.00 0.00 116.93
2,868.66 0.00 2,868.66 42.85 -2,171.22 -169.00 -23.94 547.36 -372.32 175.04 -23.20 0.00 151.84 -37.96 0.00 0.00 113.88
Balance Sheet
(RAS, RON mn, 31/12)
2009
38.12 3,322.08 49.18 3,409.38 35.07 618.82 3.70 151.70 809.29 4,218.67 2,351.63 0.00 5.49 0.00 5.33 793.14 154.07 947.21 158.46 750.54 689.02 4,218.67
2010
34.14 3,518.66 52.39 3,605.19 38.73 667.12 0.55 142.89 849.29 4,454.48 2,355.44 0.00 1.05 0.00 1.70 856.70 124.91 981.61 144.10 970.58 801.49 4,454.48
2011
77.19 3,537.83 52.96 3,667.98 41.72 1,200.13 1.20 304.76 1,547.82 5,215.81 2,467.44 0.00 1.05 0.00 47.95 849.05 94.44 943.49 171.01 1,584.88 1,390.69 5,215.81
2012e
73.43 3,577.51 52.05 3,702.99 37.78 1,032.38 1.89 146.37 1,218.43 4,921.42 2,471.77 0.00 5.00 0.00 9.96 866.50 141.62 1,008.12 140.74 1,285.82 977.38 4,921.42
2013e
73.82 3,678.21 52.05 3,804.08 36.05 985.17 1.86 131.54 1,154.62 4,958.70 2,530.24 0.00 5.00 0.00 7.65 854.48 136.17 990.65 139.90 1,285.26 826.36 4,958.70
2014e
71.49 4,001.97 52.05 4,125.50 38.54 973.44 1.41 151.67 1,165.06 5,290.56 2,587.18 0.00 5.00 0.00 8.80 819.50 145.58 965.07 169.51 1,555.00 975.16 5,290.56
Intangible assets Tangible assets Financial assets Total fixed assets Inventories Receivables and other current assets Other assets Cash and cash equivalents Total current assets TOTAL ASSETS Shareholders'equity Minorities Hybrid capital and other reserves Pension and other LT personnel accruals LT provisions Interest-bearing LT debts Other LT liabilities Total long-term liabilities Interest-bearing ST debts Other ST liabilities Total short-term liabilities TOTAL LIAB. , EQUITY
2009
366.71 -330.68 -90.84 -54.81
2010
435.17 -486.26 42.28 -8.80
2011
439.07 -350.06 86.66 161.87
2012e
178.44 -519.06 212.37 -158.39
2013e
387.28 -543.75 135.53 -14.83
2014e
647.56 -542.92 -86.49 20.13
Cash flow from operating activities Cash flow from investing activities Cash flow from financing activities CHANGE IN CASH , CASH EQU.
2009
-15.0% 14.1% 4.0% 0.2% 0.3% 0.6% 55.9% 750.7 116.6 3,267.3 57.8
2010
2.4% 13.8% 3.1% 0.4% 0.4% 0.6% 52.9% 805.5 47.3 3,288.6 54.7
2011
22.3% 14.7% 5.1% 2.9% 3.8% 3.3% 47.3% 662.3 155.9 3,273.2 61.2
2012e
-9.6% 15.2% 3.9% 1.5% 1.8% 1.9% 50.3% 808.8 239.2 3,437.2 56.4
2013e
-4.7% 19.2% 6.4% 4.4% 4.7% 4.0% 51.1% 810.8 326.4 3,489.8 54.7
2014e
7.0% 19.1% 6.1% 4.0% 4.5% 3.9% 49.0% 785.3 188.5 3,531.8 58.2
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Contacts
Group Research
Head of Group Research Friedrich Mostbck, CEFA Major Markets & Credit Research Head: Gudrun Egger, CEFA Adrian Beck (AT, SW) Mildred Hager (US, Eurozone) Alihan Karadagoglu (Corporates) Peter Kaufmann (Corporates) Carmen Riefler-Kowarsch (Covered Bonds) Elena Statelov, CIIA (Corporates) Hans Engel (Equities US) Stephan Lingnau (Equities Europe) Ronald Stferle (Equities Asia, Commodities) Macro/Fixed Income Research CEE Head CEE: Juraj Kotian (Macro/FI) Chief Analyst: Birgit Niessner (CEE Macro/FI) CEE Equity Research Head: Henning Ekuchen Chief Analyst: Gnther Artner, CFA (CEE Equities) Gnter Hohberger (Banks) Franz Hrl, CFA (Steel, Construction) Daniel Lion, CIIA (IT) Christoph Schultes, CIIA (Insurance, Utility) Thomas Unger, CFA (Oil&Gas) Vera Sutedja, CFA (Telecom) Vladimira Urbankova, MBA (Pharma) Martina Valenta, MBA (Real Estate) Gerald Walek, CFA (Machinery) Editor Research CEE Brett Aarons Research Croatia/Serbia Head: Mladen Dodig (Equity) Head: Alen Kovac (Fixed income) Anto Augustinovic (Equity) Ivana Rogic (Fixed income) Davor Spoljar; CFA (Equity) Research Czech Republic Head: David Navratil (Fixed income) Petr Bittner (Fixed income) Head: Petr Bartek (Equity) Vaclav Kminek (Media) Jana Krajcova (Fixed income) Martin Krajhanzl (Equity) Martin Lobotka (Fixed income) Lubos Mokras (Fixed income) Josef Novotn (Equity) Research Hungary Head: Jzsef Mir (Equity) Orsolya Nyeste (Fixed income) Zoltan Arokszallasi (Fixed income) Research Poland Head: Piotr Lopaciuk (Equity) Tomasz Kasowicz (Equity) Marek Czachor (Equity) Michal Hulboj (Equity) Research Romania Head: Lucian Claudiu Anghel Head Equity: Mihai Caruntu (Equity) Dorina Cobiscan (Fixed Income) Dumitru Dulgheru (Fixed income) Eugen Sinca (Fixed income) Raluca Ungureanu (Equity) Marina Alexandra Spataru (Equity) Research Slovakia Head: Maria Valachyova (Fixed income) Martin Balaz (Fixed income) Research Ukraine Head: Maryan Zablotskyy (Fixed income) Ivan Ulitko (Equity) Igor Zholonkivskyi (Equity) Research Turkey Head: Erkan Kilimci Sevda Sarp (Equity) Evrim Dairecioglu (Equity)
+43 (0)5 0100 11902 +43 (0)5 0100 11909 +43 (0)5 0100 11957 +43 (0)5 0100 17331 +43 (0)5 0100 19633 +43 (0)5 0100 11183 +43 (0)5 0100 19632 +43 (0)5 0100 19641 +43 (0)5 0100 19835 +43 (0)5 0100 16574 +43 (0)5 0100 11723 +43 (0)5 0100 17357 +43 (0)5 0100 18781 +43 (0)5 0100 19634 +43 (0)5 0100 11523 +43 (0)5 0100 17354 +43 (0)5 0100 18506 +43 (0)5 0100 17420 +43 (0)5 0100 16314 +43 (0)5 0100 17344 +43 (0)5 0100 11905 +43 (0)5 0100 17343 +43 (0)5 0100 11913 +43 (0)5 0100 16360 +420 956 711 014 +381 11 22 09 178 +385 62 37 1383 +385 62 37 2833 +385 62 37 2419 +385 62 37 2825 +420 224 995 439 +420 224 995 172 +420 224 995 227 +420 224 995 289 +420 224 995 232 +420 224 995 434 +420 224 995 192 +420 224 995 456 +420 224 995 213 +361 235-5131 +361 373-2026 +361 373-2830 +48 22 330 6252 +48 22 330 6251 +48 22 330 6254 +48 22 330 6253 +40 37226 1021 +40 21 311 2754 +40 37226 1028 +40 37226 1029 +40 37226 1026 +40 21 311 2754 +40 21 311 2754 +421 2 4862 4185 +421 2 4862 4762 +38 044 593 9188 +38 044 593 0003 +38 044 593 1784 +90 212 371 2510 +90 212 371 2537 +90 212 371 2535
Ozlem Derici (Fixed Income) Mehmet Emin Zumrut (Equity) M. Grkem Goker (Equity) Sezai Saklaroglu (Equity)
+90 212 371 2536 +90 212 371 2539 +90 212 371 2534 +90 212 371 2533
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012 Transelectrica
24 22 20 18 16 14 12 10 Dec 10
Rating history
Date 29. Sep 11 04. Jan 11 26. May 10 29. Mar 10 08. May 09 04. Aug 08 11. Jun 08 Rating Accumulate Buy Accumulate Under review Accumulate Buy Not rated Price 17.22 20.59 16.20 19.90 13.50 22.60 26.80 Target Price 19.50 24.00 18.50 14.40 26.80
Company description
Transelectrica is the Romanian Transmission and System Operator, which plays a key role in the Romanian electricity market. It manages and operates the electricity transmission system and provides electricity exchanges among Central and Southeastern European countries, as a member of UCTE and ETSO. Transelectrica is responsible for electricity transmission, system and market operation and grid and market infrastructure Sep 12 development, ensuring the security of the system.
29/09 A
Mar 11
Jun 11
Sep 11
Dec 11
Mar 12
Jun 12
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Important Disclosures
THIS DOCUMENT MAY NOT BE TAKEN, TRANSMITTED OR DISTRIBUTED INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR TO ANY U.S. PERSON OR TO ANY INDIVIDUAL OUTSIDE CANADA, AUSTRALIA OR JAPAN WHO IS A RESIDENT OF THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR TO THE PRESS IN THESE COUNTRIES
General disclosures All recommendations given by Erste Group Research are independent and based on the latest company, industry and general information publicly available. The best possible care and integrity is used to avoid errors and/or misstatements. No influence on the rating and/or target price is being exerted by either the covered company or other internal Erste Group departments. Each research piece is reviewed by a senior research executive, the rating is agreed upon with an internal rating committee of senior research executives. Erste Group Compliance Rules state that no analyst is allowed to hold a direct ownership position in securities issued by the covered company or derivatives thereof. Analysts are not allowed to involve themselves in any paid activities with the covered companies except as disclosed otherwise. No part of their compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or views expressed by them contained in this document. Disclosure Checklist
Company Transelectrica
ISIN ROTSELACNOR9
Disclosure 4, 6
Disclosures of potential conflicts of interest relating to Erste Group AG, its affiliates, subsidiaries (together Erste Group AG) and its relevant employees with respect to the issuers, financial instruments and/or securities forming the subject of this document are valid as of the end of the month prior to publication of this document. Updating this information may take up to ten days after month end.
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Description of specific disclosures (4) (6) Within the past year, Erste Group AG and/or its affiliates have managed or co-managed a public offering for the covered company. Erste Group AG and/or its affiliates have an agreement with the covered company relating to the provision of investment banking services or have received compensation during the past 12 months.
Erste Group rating definitions Buy Accumulate Hold Reduce Sell > +20% to target price +10% < target price < +20% 0% < target price < +10% -10% < target price < 0% < -10% to target price
Our target prices are established by determining the fair value of stocks, taking into account additional fundamental factors and news of relevance for the stock price (such as M&A activities, major forthcoming share deals, positive/negative share/sector sentiment, news) and refer to 12 months from now. All recommendations are to be understood relative to our current fundamental valuation of the stock. The recommendation does not indicate any relative performance of the stock vs. a regional or sector benchmark. Distribution of ratings
Coverage universe Recommendation Buy Accumulate Hold Reduce Sell N.R./UND.REV./RESTR. Total No. 64 46 42 10 5 16 183 in % 35.0 25.1 23.0 5.5 2.7 8.7 100.0
Inv. banking-relationship No. in % 18 37.5 13 27.1 12 25.0 4 8.3 0 0.0 1 2.1 48 100.0
Explanation of valuation parameters and risk assessment Unless otherwise stated in the text of the financial analysis/investment research, target prices in the publication are based on either a discounted cash flow valuation and/or comparison of valuation ratios with companies seen by the analyst as comparable or a combination of the two methods. The result of this fundamental valuation is adjusted to reflect the analyst's views on the likely course of investor sentiment. Whichever valuation method is used there is a significant risk that the target price will not be achieved within the expected timeframe. Risk factors include unforeseen changes in competitive pressures or in the level of demand for the companys products. Such demand variations may result from changes in technology, in the overall level of economic activity or, in some cases, from changes in social values. Valuations may also be affected by changes in taxation, in exchange rates and, in certain industries, in regulations. Investment in overseas markets and instruments such as ADRs can result in increased risk from factors such as exchange rates, exchange controls, taxation, political and social conditions.
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Erste Group Research Company Report Transelectrica | Utility | Romania 24 July 2012
Disclaimer This research report was prepared by Erste Group Bank AG (Erste Group) or its affiliate named herein. The individual(s) involved in the preparation of the report were at the relevant time employed in Erste Group or any of its affiliates. The report was prepared for Erste Group clients. The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such. All opinions, forecasts and estimates herein reflect our judgment on the date of this report and are subject to change without notice. The report is not intended to be an offer, or the solicitation of any offer, to buy or sell the securities referred to herein. From time to time, Erste Group or its affiliates or the principals or employees of Erste Group or its affiliates may have a position in the securities referred to herein or hold options, warrants or rights with respect thereto or other securities of such issuers and may make a market or otherwise act as principal in transactions in any of these securities. Erste Group or its affiliates or the principals or employees of Erste Group or its affiliates may from time to time provide investment banking or consulting services to or serve as a director of a company being reported on herein. Further information on the securities referred to herein may be obtained from Erste Group upon request.
Past performance is not necessarily indicative for future results and transactions in securities, options or futures can be considered risky. Any forecasts or price targets shown for companies and/or securities discussed in this document may not be achieved due to multiple risk factors including without limitation market volatility, sector volatility, corporate actions, the unavailability of complete and accurate information and/or the subsequent transpiration that underlying assumptions made by Erste Group AG or by other sources relied upon in the document were inapposite. Not all transactions are suitable for every investor. Investors should consult their advisor, to make sure that the planned investment fits into their needs and preferences and that the involved risks are fully understood. Neither Erste Group AG nor any of its respective directors, officers or employees accepts any responsibility or liability whatsoever for any expense, loss or damages arising out of or in any way connected with the use of all or any part of this document. Erste Group AG may provide hyperlinks to websites of entities mentioned in this document, however the inclusion of a link does not imply that Erste Group AG endorses, recommends or approves any material on the linked page or accessible from it. Erste Group AG does not accept responsibility whatsoever for any such material, nor for any consequences of its use. This document is for the use of the addressees only and may not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose, without the prior, written consent of Erste Group AG. The manner of distributing this document may be restricted by law or regulation in certain countries, including the United States. Persons into whose possession this document may come are required to inform themselves about and to observe such restrictions. By accepting this document, a recipient hereof agrees to be bound by the foregoing limitations.
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