STOCKWATCH - RCI Keeps Romanian Gas Transmission Firm Transgaz at 'Buy'

“As the results of the company came mostly in line with expectations we view them as neutral. Still, we will review our estimates to take into account the reported results. Thus we keep our ‘Buy’ recommendation and place the target price under review,” RCI said in a statement.

RCI cut Transgaz's 12-month target price to 247.5 lei ($80.8/64.4 euro) per share from 277.1 lei in September.

The company's revenue reached 239 million in the third quarter, 2.0% above RCI’s projection, while its operating profit reached 38.7 million lei, 27% higher than expected.

”While grid losses, personnel expenses and maintenance costs came in line with our estimates, we were surprised by a 7.0 million lei gain from the adjustment of the value of current assets. The gain was generated by a reversal of provisions related to some old receivables from Termoelectrica,” the statement said.

The interest income was 62% below RCI’s estimates, reaching 4.9 million lei in the third quarter of this year, as the cash position of the company fell 25% to 373.1 million lei, on higher working capital needs. The net profit of the company over the same period reached 35.5 million lei, 12% above RCI’s projection.

Transgaz’s nine-month net profit rose 4.45% on the year to 179.08 million lei, while its turnover rose 10.7% to 774.342 million lei.

Transgaz is listed on the Bucharest Stock Exchange, BVB, and is part of BVB’s blue-chip index, the BET. Its shares last traded at 131.6 lei by 1013 GMT, down 4.78% from Tuesday's close.

(1 euro = 3.8428 Romanian lei)