Romanian electricity stocks power up

Shares of the largest local listed companies in the electricity sector have gained about 12% since the beginning of September, which makes them the best performers of the “blue-chip” stocks on the Bucharest Stock Exchange (BVB) this month.

State owned electricity transporter Transelectrica (BVB ticker: TEL) saw its shares increase by 12.5% in the last three weeks. Transelectrica, which strongly improved its profitability in the last two years, on higher electricity transmission fees, has gained 66% so far this year. Transelectrica’s shares also had a strong start in Monday’s trading session (September 22), when its shares were up 2%.

The company’s market capitalization increased by EUR 175 million, to EUR 442 million, as of September 22. Transelectrica had a net profit of EUR 73 million in the last four quarters, which means that it is currently valued at a price per earnings (P/E) multiple of 6.

Shares of electricity producer Nuclearelectrica (BVB ticker: SNN), which is also state-owned, also gained 12.5% this month. Several factor contributed to this. On Friday, the company announced that it is currently analyzing a potential takeover of some of Enel’s assets in Romania. Italian group Enel said it will sell its electricity distribution companies in Romania and the Romanian state wants to buy at least one of them, Enel Distributie Dobrogea, which it considers strategic. Nuclearelectrica and electricity distributor Electrica could be part of this transaction.

Nuclearelectrica has also revised its budget for this year and increased its profit target 3.5 times, to EUR 22.4 million. The company is currently valued at EUR 567 million, which is 25 times its estimated profit. Nuclearelectrica, which operates the Cernavoda nuclear power plant, was listed on the Bucharest Stock Exchange in September last year. Despite the recent increase in the share price, Nuclearelectrica is still trading below the IPO price, which was RON 11.2 per share. On Monday, September 22, SNN shares were trading at RON 8.8 per share.

Electricity distributor Electrica, which was listed both on the Bucharest Stock Exchange and London Stock Exchange at the beginning of July, also saw its shares surge by 11.7% this month, on rumors about the takeover of some of Enel’s assets. The company’s shares were also boosted by the changes in its administrative board, which were to be decided by the company’s shareholders on Monday, September 22.

Electrica’s shares reached an all-time high of RON 13 on Friday, which is 18% above the IPO price, which was RON 11. The company has a market capitalization of EUR 1.02 billion.

The main index of the Bucharest Stock Exchange, BET, which follows the ten most important companies listed on the market, gained just 0.8% this month, as the large increases of electricity stocks were canceled by corrections registered by shares of oil and gas company OMV Petrom (SNP), -6.6% this month, and by the shares of the two listed banks, BRD and Banca Transilvania (TLV), which lost 3.7% and 3.3% respectively.

Fondul Proprietatea (FP) has gained 6.6% so far in September, its shares reaching new all-time highs last week.

Andrei Chirileasa, andrei@romania-insider.com

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