Transelectrica - Guidance for 2013-2015 below expectations
Transelectrica published the investment plans over 2013-2015 to be approved in the GSM of April 1. The figure proposed for 2013 amounts to RON 330 mn (excl. the connections to the grid financed by other parties) and stands below our estimate of RON 450 mn. In 2014 and 2015 the amounts are close to RON 700 mn, significantly above the historical capex and above our estimate of RON 500 mn pa. The investments are directed towards an upgrade of the grid, interconnection with neighbouring countries and the connection to the grid of producers of energy from renewable sources. The investments follow to be financed close to 60% by debt. The amounts sound a bit large to us and the banks might be reticent to lend given the poor results attained by the company over the last years. The capex should enlarge the RAB and thus the regulated return on assets, which should be positive for our valuation. However, we do not exclude a downsizing of the plan to a level more bankable and within the capacity of the company for investments.
Transelectrica also provided a guidance for the performance over 2013-2015 to be approved in the next GSM. The gross profit is estimated at RON 44.6 mn in 2013 and goes up to RON 46.8 mn in 2014 and RON 50.2 mn in 2015. Given the 13% rise in tariff for 2013 we expected a significant improvement in performance after weak 2012 results (RON 27 mn net profit). The guidance offered by Transelectrica is usually conservative but it suggests that the tariff rise might come with a correspondent increase in costs. We rate the news as negative.
