ZF English

Transelectrica up and down on Stock Exchange, 2006 profit value uncertain

30.08.2006, 19:41 9

Transelectrica's shares opened their first day of trading on the Bucharest Stock Exchange 50% higher in price than what they sold for during the offering conducted in view of listing.
The market price put the company at 474.77 million euros. Transelectrica thus became the fifth largest company on the Bucharest Stock Exchange after Petrom, BRD, Banca Transilvania and Alro.
Its officials hinted that the company would not be making profit in the second half.
The investors who sold yesterday were able to pocket profits of as much as over 50% in only two months, higher than the yields of any other investment in this period. The price of Transelectrica shares rose at the beginning of the trading session on the Bucharest Stock Exchange to a maximum of 25.5 RON, while the price at which it sold during the offering was 16.8 RON.
The increases made many of those that had bought shares (during the offering) to cash in on their profits, with Transelectrica liquidity on the market being very high as a result. Transactions with Transelectrica shares amounted to 6.3 million euros, and 12.7% of the shares put up for sale during the offering changed hands yesterday. If comparing it against the amount of shares available to small investors in the offering, the stake transferred yesterday stands at about 32%.
After starting out in full gear, the quote began to decline, settling at about 23 RON/share. At the end of the session, the quote had reached 22.8 RON/share, up 35.7% compared with the offering price.
The increases of these shares at the opening of the session confirmed the most bullish expectations of the brokers on the market. When ZF asked brokers what price Transelectrica might begin trading on its first day, some brokers said they expected prices to be at least 50% higher, linking such optimism with the first half results the company has posted. Transelectrica concluded the first half with a net profit of approximately 110 million RON (31 million euros), higher than the whole of 2005's profit, which amounted to 29.2 million euros.
Transelectrica management, however, said yesterday that they expected the full-year net profit to be close to the first-half figure.
"Considering the 110 million RON net profit in the first six months, we expect profit of around 100-110 million RON for the entire year," Stelian Gal, Transelectrica's general manager told ZIARUL FINANCIAR.
"The first half profit is not conclusive. We had all sorts of expenses planned that were not made and led to a somewhat artificial growth of profit. It is mainly about expenses related to unfinished maintenance work," Gal went on. He added the profit estimated for 2006 was much higher than initially budgeted, 50 million RON (14.1 million euros). "You have to understand these are estimates. This is not an exact science for them to be precise," Gal stated.
Nevertheless, Razvan Purdila, the head of the strategy and capital market department of Transelectrica estimated about 45 million euros in net profit for 2006 early in June.

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