Energy stocks and utilities push Bucharest Stock Exchange higher in August

The performances of three energy and utilities companies pushed the main index of the Bucharest Stock Exchange, the BET, up by 3.28% in August.

Shares of electricity transport company Transelectrica (BVB ticker: TEL) gained 7.8% in August, while shares of gas transport company Transgaz (TGN) increased by 7.2% and shares of gas producer Romgaz (SNG) were up by 7.1%.

Transelectrica’s shares are among the best performing shares on the BVB this year, with a 61.5% total gain, of which 14.1% comes from the dividend for 2013. Transgaz shares also brought a total gain of 30.4% for their holders in the first eight months of this year, while Romgaz returned 13.7%, including the dividend for 2013. The BET Index had a 10% growth in the first eight months, but this does not include the dividend yields of the companies in its composition.

The shares of the three energy and utilities companies were supported by stronger financial results posted for the first half of this year. Transelectrica and Transgaz both more than doubled profits in the first half of 2014 compared to the same period of 2013, while Romgaz increased its bottom line by almost 40%. This was mainly the result of higher fees approved by the state for electricity and gas transport and of higher regulated gas prices. Transelectrica, Transgaz and Romgaz are all controlled by the Romanian state.

Electricity distributor Electrica (EL) also had a good performance in August, its shares gaining 5.9%. Electrica’s shares closed the month at the highest level since their listing on the Bucharest Stock Exchange, on July 4. The RON 11.65 per share level is also almost 6% higher than the price for which the company sold 51% of its shares in an initial public offering (IPO) in June, which was RON 11 per share. Electrica posted lower revenues and profit in the first six months of this year, but the share price increase reflects positive developments in the company’s corporate governance. Electrica’s shareholders will elect a new administration board in September in which most of the members will be independent.

The Romanian state, which holds 49% of Electrica’s shares, nominated baroness Arielle Malard de Rothschild for a place in the company’s administration board. News also emerged that Electrica is interested in buying some of the local assets of Italian group Enel, which would strengthen the company’s position on the electricity distribution market.

Shares of Romanian investment fund Fondul Proprietatea (FP) gained 4.9% in August, while shares of OMV Petrom (SNP), the largest Romanian listed company, were up 2.1%. The only energy stock that was down in August was Nuclearelectrica (SNN), which lost 7.8%, as the company’s profit dropped by two thirds in the first half.

Shares of BRD and Banca Transilvania (TLV), two of Romania’s largest banks, were slightly down in August, as their results were in line with expectations. The local banking system is currently undergoing an accelerated cleaning process of the non-performing loans portfolio (NPL), while lending is still slow. Shares of smaller Banca Carpatica (BCC) gained 13.6% last months as investors expect it to be bought by a larger bank or financial investor.

The shares of the five Romanian financial investment companies (SIF) had mixed evolutions in August, ranging from an 8.3% gain for SIF Moldova (SIF2) to an 8.4% drop for SIF Transilvania (SIF3).

Overall, August was a good month for the local stock market as the total value of stock trading was of EUR 190 million, up by more than a third compared to the same month in 2013. Higher trades were mainly supported by acquisitions from foreign investment funds, some of which still perceive Romania as a safe haven in the region.

See the evolutions of the most traded 20 stocks on the BVB in August here. The evolutions of the most liquid shares on the BVB in the first eight months of 2014 can be found here.

Andrei Chirileasa, andrei@romania-insider.com

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