Banca Transilvania - 4Q 2012 results close to expectations (neutral)
Banca Transilvania (TLV) has published its 4Q 12 unconsolidated results, with a net profit in line with our expectations and consensus estimate, as lower risk costs have been compensated by a higher effective tax rate. Loan growth for the quarter was modest by TLV standards, at only 0.1% qoq, or around 1% adjusted for currency effect. Deposits contracted 2.6% qoq, triggering an increase of L/D ratio to around 79%. Despite this, NIM for the quarter declined to 2.8% from 2.9% (assuming that TLV has booked a similar amount of T-bills sold under interest revenues). NPLs increased modestly and risk costs amounted to only 259 bps, despite the fact that TLV had to book RON 23 mn of provision charges after the audit of 1H 12 results. We view these results as neutral for TLV shares but we put our TP and recommendation under review. While we will probably raise our TP due to a decrease of Romanian risk free rates we have doubts for the moment about our "hold" recommendation considering the strong run of the stock.
Banking system losses climbed to RON 2.1 bn at end-2012
According to the media, banking system losses stood at RON 2.1 bn at the end of 2012. After nine months, losses were slightly lower than EUR 200 mn, the losses reported at the end of the first semester. This points that the banks recorded large losses in 4Q. BCR recorded losses of RON 760 mn in 1-3Q 2012 so part of the losses of 4Q could probably be accrued to BCR. Still we see the news as negative for BRD-GSG as losses could exceed our estimate (net losses of RON 29 mn) and consensus estimates (net profit RON 16 mn in 4Q).
Transelectrica found guilty in a trial with wind park developer
According to a company release to the stock exchange, the court ruled in favor of the wind park developer Eolica Dobrogea. Eolica sued Transelectrica in February 2012 claiming Transelectrica rejected the request of Eolica to sign certain papers required to proceed with the connection of the wind park to the grid. The court requested now that Transelectrica finalize the connection to the grid. Transelectrica mentioned its intention to appeal the court’s decision.
According to our records the prejudice claimed by Eolica stood at EUR 118 mn per year, but apparently no pecuniary penalties were set by the Court at present. Thus we view the news as neutral.
Teraplast calls EGSM to approve the cancellation of 9 mn own shares (positive)
Teraplast (TRP) has called an Extraordinary Shareholders Meeting for March 14 to approve the cancellation of some 9 mn own shares and consequently to reduce the share capital from RON 29.7 mn to RON 28.8 mn. These shares were bought in several share repurchase programs during the last three years. The initial proposal was to distribute these shares to the management and employees, but subsequently the company proposed its shareholders to cancel the redeemed shares. In the GSM of April 2012, shareholders rejected both proposals.
If shareholders would approve the cancellation of the shares, our 12-m Target Price (RON 0.26 per share) should be some 3% higher, so we view the news as slightly positive.
