Dan Dascal, BT Asset Management: "The listing of Hidroelectrica put BVB on the map of many foreign institutional investors"

Hidroelectrica's primary listing offer was, without a doubt, the event of the year 2023 for the Bucharest Stock Exchange and, we could even say, the most important event of the last ten years for the local capital market, says Dan Dascăcal, CEO of BT Asset Management.

"Through the size of the Offer and the specifics of the company, one of the largest hydro renewable energy producers in Europe, this listing put BVB on the map of many foreign institutional investors, large investment funds that, until that moment, did not necessarily have a connection with the stock market local. These factors contributed to the success of the Hidroelectrica Public Offer, which was the largest IPO of 2023 in Europe", Dan Dascăcal told us.

The director of BT Asset Management added: "In the same way, many local retail investors contacted the Romanian stock market for the first time, attracted by the company's profile and its strategic importance in the Romanian economy. We appreciate the effort of the entities involved in the Hidroelectrica IPO, for their excellent contribution in promoting this event. With this listing, the liquidity at BVB practically doubled. A lot of new money entered the market, money that was waiting for this Offer, either in bank deposits or in defensive funds. Thus, we can say that Hidroelectrica's listing on the Bucharest Stock Exchange was the landmark event for the local market in the last ten years, with a positive impact for all market actors".

• "The record financial results recorded by Hidroelectrica were perceived positively by investors, a determining factor in price appreciation"

Related to the increase in the company's share price from the listing until now, the Director of BT Asset Management points out that, in the last year and a half, the entire market had a very good evolution, and Hidroelectrica did not make a discordant note.

"Compared to the price from the Initial Public Offer, we currently see a consistent appreciation of over 35%, including the dividends paid by the company. We have to start from the premise that the price in the Offer to Sell valued the company at a decent value, especially since we are talking about a company with solid financial results and strategic importance. The context in which the listing took place was very good, the record financial results recorded by Hidroelectrica were perceived positively by investors, a determining factor in the price appreciation", Dan Dascăcal told us.

In his opinion, an aspect that weighed a lot in the good evolution of Hidroelectrica's price was the estimate of the dividend that the company was going to distribute to shareholders, from the profit for the year 2023.

"Investors' expectations were met by the company, it granted a dividend with yield around 10%, a value that is well above what we see for similar companies listed on foreign markets. Another factor that weighed in the appreciation of the share price was the high demand from institutional investors for whom, in addition to the very good economic prospects of the company, the ESG criterion had a lot of contact. Hidroelectrica is one of the few profile companies, listed on the stock exchanges in Europe, that exclusively produces renewable electricity (hydro, solar, wind)", added Dan Dascăl.

• "The significant operating cash that the company generates allows it to continue to adopt a generous dividend policy"

Regarding the prospects of the Hidroelectrica share price, Dan Dascăcal points out that, according to the Revenue and Expenditure Budget published by the company, the estimates for the next period are decreasing compared to 2023.

"Revenues and profit are forecast to be affected by two main factors, namely: lower energy production than the previous year and lower electricity prices," says the Director of BT Asset Management.

Dan Dascăcal added: "However, 2023 was a record year for Hidroelectrica, with the highest profit in history. Our estimates show that in recent months energy production has decreased by approximately 30% compared to the same period last year. This decrease can be considered a "normalization", considering that, in the last two years, a number of positive factors influenced the company's results, which recorded record values. However, we believe that these expectations are already reflected in the share price".

According to the Director of BT Asset Management, the significant operating cash that the company generates allows it to continue to adopt a generous dividend policy, which can support the share price in the market. "The economic context in which we find ourselves leads us to believe that interest rates will decrease in the coming years, so that the company will continue to be attractive through the prism of the dividend yield", concluded Dan Dascăl.