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

Next year's projections are under Romanian Accounting Standards.

“As the profit and loss items came relatively close to our estimates we maintain our ‘Buy’ recommendation. We will incorporate the data released into our forecasts and for the moment we keep our target price under review,” RCI said in a statement.

RCI cut in September Transgaz's 12-month target price to 247.5 lei ($89.4/62.5 euro) per share from 277.1 lei.

Transgaz expects EBITDA [earnings before interest, tax, depreciation and amortisation] to come in at 465 million lei next year, in line with RCI’s estimates, and its net profit is seen at 310 million lei, 4.0% below RCI’s estimates. Transgaz reduced in October its earlier forecast for this year's net profit by 3.8% to 259.05 million lei.

The gas transmission firm sees its revenue up 16% to 1.4 billion lei in 2009, some 4.0% above RCI’s estimates. Revenues from domestic transportation exceed RCI’s forecasts by 3.5%, reaching 1.2 billion lei.

”On the costs side, grid losses are 3.0% higher than our forecast at 230 million lei. Maintenance expenses stand some 10% below our projections, still other third parties expenses budgeted lead to 17% higher than expected third parties costs. Also, other costs with materials came significantly above expectations,” the statement said.

The company’s nine-month net profit totalled some 179.08 million lei, up from 171.446 million lei a year earlier. Transgaz net profit fell 5.85% to 224 million lei last year.

Majority state-owned Transgaz is listed on the Bucharest Stock Exchange, BVB, and is part of BVB’s blue-chip index, the BET. Its shares closed 2.29% up at 120.7 lei on Wednesday.

(1 euro = 3.9593 Romanian lei)