“We believe Transelectrica’s share price collapse this year, of 30% year-to-date, has created an entry opportunity,” Erste said in a report.
It said Transelectrica is valued at a sensible discount to its regulated asset base compared with much more indebted peers in western Europe, which should leave room for improvement in the coming period.
“The high regulatory risk perception and non-transparent annual transmission tariff setting are the main explanations for such large trading discounts required by investors,” the report showed.
Erste expects the regulatory risk might translate into a 25-30% lower average EBIT in the 2013-2017 period.
“However, even in these circumstances, we see the operating profit as high enough to absorb the capital expenses needs without major pressure on indebtedness,” the Austrian bank said.
Transelectrica is 58.68%-owned by the Economy Ministry.
At around 13:40, Transelectrica traded down 0.73% at RON12.16 a share in Bucharest.