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Sep 23, 2009 16:41 EEST
BUCHAREST (Romania), September 23 (SeeNews) – Raiffeisen Capital & Investment (RCI) said on Wednesday it has bumped up its recommendation on the stock of Romanian power grid operator Transelectrica to 'hold' from ‘reduce’ and raised its target price after the company revised its 2009 budget.
RCI has raised its 12-month target price for Transelectrica to 13.1 lei ($4.6/3.1 euro) from 12.7 lei.
“The target price offers an upside of 2.0% against the closing price of September 21 and justifies us to upgrade the recommendation to Hold from Reduce,” RCI said in a statement.
Transelectrica, a component of the blue-chip BET index of the Bucharest Stock Exchange, was trading up 1.56% at 13 lei by 1246 GMT on Wednesday.
The power grid operator has cut by 86% to 10 million lei its earlier gross profit forecast for this year. It now sees its total revenue at 2.69 billion lei this year, down from 3.07 billion lei forecast earlier. Total costs are expected to reach 2.68 billion lei, below the 3.0 billion lei projected earlier.
Transelectrica's gross profit fell 33% to 51.2 million lei last year.
“The company expects quantities transported in 2009 to fall 8.0% while we expect the decline to be more abrupt at 12%. Other matters that we found significant were that salaries were cut by 5.0% compared with the previous budget and capital expenditures were raised by 73 million lei,” RCI said.
“All in all, Transelectrica budgeted for 2009 an operating profit of 100.3 million lei, compared to our current estimate of 73.7 million lei, counting on higher quantities transported than our expectations.”
(1 euro = 4.247 Romanian lei)
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