Hidroelectrica completes one year since its listing on the Bucharest Stock Exchange

Today, Hidroelectrica (H2O) completes one year since its listing on the Bucharest Stock Exchange (BVB), which took place last summer following a public offering worth almost 1.9 billion euros, the largest in Europe in 2023.

The producer and supplier of electricity came to the stock exchange during a period of growth in the international stock markets and in the year in which it recorded the highest profit in history, of almost 6.4 billion lei, being perceived by investors as a solid defensive company of strategic importance to our country's economy and good dividend payer. In addition, it produces energy from renewable sources, thus being one of the facilitators of the energy transition.

In this context, the price of the H2O share has been on an upward trajectory, from the listing to the present with an increase of 17%, and compared to the closing price of the public offer of 104 lei per share and taking into account the dividend granted of the company this year, the total yield of Hidroelectrica securities amounts to 37%.

Analysts and investment fund managers consulted by BURSA newspaper point out that the listing of the energy producer brought new investors to BVB, both retail and institutional, including foreigners who until then had not had our market on their radar, brought new money to the market and increased the much-needed investment supply to natural buyers - private pension funds. At the end of May, the cumulative holding in Hidroelectrica of all private pension funds in our country amounted to 6.7 billion lei, their largest investment in a single company, according to the information available on the aboutpensiiprivate.ro website.

The fund managers also point out that Hidro's listing has increased the chances of our market entering the category of emerging markets in the MSCI hierarchy, the rating agency that categorizes us as a frontier market.

However, it seems that the initial expectations regarding the rapid promotion were a bit high, given that, after the excitement that appeared with the listing of the energy producer, the liquidity of the company's shares and the market in general continued to decrease, and at the last assessment in June, MSCI did not mentions nothing about Romania.

For this year, Hidroelectrica has budgeted revenues of 10.3 billion lei, 15% below those obtained last year and a net profit of 4.15 billion lei, down 35% compared to 2023, being rather a return to results closer to "normality", after an exceptional year.

Analysts are of the opinion that, in the short term, the ratio between the supply and demand of Hidro shares should support the company's stock exchange quote. But the year-end elections may bring more volatility for the share price, and a slight decline in both electricity production and prices is expected in the medium term.However, the company has solid operating cash-flow, which allows it to maintain its generous dividend policy.

In addition, it is controlled by the state, which in recent years has demanded that all profits be distributed to shareholders as dividends.

At the end of May, the private pension funds owned 11.2% of Hidroelectrica, of which the Pilon II funds' holding was equivalent to 10.8% of the electricity producer and supplier, according to the website desprepensiiprivate.ro. The Romanian State, through the Ministry of Energy, has 80% of Hidroelectrica, issuer whose valuation amounts to 57 billion lei, the largest Romanian company on the Bucharest Stock Exchange.