Analysts believe the most important listed companies will generally report good results for the third quarter, which will show that the shares continue to be cheap when measured against balance sheet indicators, although their prospects have worsened in the last few months amid external turmoil.
“I think in the vast majority of cases nine-month results will confirm the positive evolution recorded in the first six months. Petrom, Transgaz, Antibiotice and Biofarm are posting higher results. Perhaps there will not be as high increases as in the first six months, but there will be a year-on-year increase in the third quarter,” believes Mihai Caruntu, head of the capital markets research department of BCR.
“Our favorites remain Fondul Proprietatea, Transgaz and Biofarm. The main companies in the oil and energy sectors, as well as in the pharmaceutical sector, are sheltered and benefit from this context of pessimism,” he adds.
Mihai Alexa, analyst at Broker Cluj, shares this opinion, anticipating a good quarter, especially for banks.
“I think the positive trend of the first two quarters of this year continued into the third quarter, with the majority of companies posting rises against the similar period of 2010. In particular as far as banks are concerned (BRD.RO and TLV.RO), I expect their profits to be significantly higher (up 30% for TLV and up 70% for BRD in 3Q of 2011 against 3Q of 2010) thanks to lower spending on risk provisions. On the other hand, as far as the operating profit is concerned, I expect slightly weaker results than last year, mainly because of lower results on the segment of financial transactions as a result of turmoil on the international financial markets such as the decline in the value of the share portfolio,” says Mihai Alexa.
Companies with a high indebtedness level and with foreign currency loans could report financial losses because of foreign-denominated debts being reevaluated, analysts warn, after the leu continued to depreciate in the third quarter.
“The profits of companies with debts in foreign currency will be negatively influenced by the evolution of the leu/euro exchange rate and leu/dollar exchange rate in the third quarter. At the end of September, the leu depreciated by over 2% against the euro and by 3% against the dollar, so loans in foreign currency will be reevaluated at less favorable exchange rates, having a negative impact on the net profit. By analyzing the overall market, I expect 3Q results to be as good as those recorded in the first half,” says Dragos Darabut, analyst at Tradeville.
Florin Ilie, manager of capital markets at ING Bank, believes companies will feel more pressure on the costs of lending and the low willingness of banks to lend to them.
“Companies’ prospects have worsened. There is already pressure in terms of demand, lending and income. The availability of foreign currency loans will be ever lower, companies will focus on loans in lei and the cost of leu-denominated loans will increase. All of these things will also manifest themselves in 2012 and the problem will become increasingly severe,” says the ING bank analyst.
(English version by Daniela Stoican)