Prime Transaction estimates a value of 61.13 lei for the Nuclearelectrica share, 30% above the market price

• "The rate of distribution of profit to dividends remained close to that of last year, with a decreasing yield, but still above the average of BSE issuers", the report states

• Prime uses the future cash flow method to value the stock

The analysis team of the Prime Transaction brokerage house estimates an intrinsic value of 61.133 lei, 30.2% above yesterday's market price, from the first part of the trading session, of 46.95 lei, as shown in the attached report.

"In the last year, several steps have been taken towards the implementation of major investment projects, such as the re-engineering of Unit 1, the construction of Units 3 and 4 at Cernavodă and the project of small modular reactors at Doiceşti", the report signed by Marius states Pandele.

The distribution rate of profit to dividends remained close to last year's, with a decreasing yield, but still above the average of issuers from the Bucharest Stock Exchange. According to the report, Nuclearelectrica's financial results entered a downward slope, mainly determined by the decrease in the average selling price of electricity, both naturally, as a result of the decrease in inflationary pressures, and artificially, by capping the price by State.

"The existence of the mechanism for the centralized purchase of electricity (MACEE) administered by OPCOM, for which the purchase price was changed from 450 lei/MWh to 400 lei/MWh during this year, generated a significant volatility of financial results. This system is the fourth that the State has experienced for the electricity market after the COVID pandemic, starting with the total liberalization of the market, then passing through the stage of introducing a surcharge for energy sold at a price higher than a benchmark set by the State, then through that of compensation price differences for consumers, and finally by establishing a fixed price at which part of the electricity will be sold", the report states.

To evaluate the SNN share, Prime Transaction uses the future cash flow (DCF) method, by which it obtains an estimated intrinsic value of 61.133 lei/share, above the current market price, but 15.5% lower than the value resulting from the previous analysis of the company, since last June.

"Compared to the previous material, the main reason for the decrease is the adjustment of estimates regarding the price of electricity, as a result of the evolution of the market during the analyzed period," the Prime report states.

The analyst draws attention to the fact that they have not yet included in the calculations the very likely change in the costs of re-engineering the two currently operated reactors and those of the construction of the other two, which makes the assessment slightly optimistic.

"Also, the other risk elements specific to the issuer should be taken into account, mainly related to the capped sales price, the period of application of the additional income tax and the dependence on the State to complete the investment objectives that the company and he proposed to them", the document also states.

The Prime Transaction Report is not an investment recommendation. The estimated value is not a target price that the analyst expects the issuer's stock to reach, but only an intrinsic value, dependent on the confirmation of the assumptions detailed in the report.

The report represents general information and is not a substitute for investment consulting services, it is mentioned in the analysis carried out by de Prime, which can be consulted in the attached document.