"Raiffeisen" raises target price for "Transgaz" shares by 5%, to 257.6 lei

Raiffeisen Capital & Investment has raised the target price for Transgaz (TGN) shares for the next 12 months by 5%, to 257.6 lei, as the revenues from gas distribution are expected to compensate the effect of the legislative modifications concerning the payment of dividends, Mediafax announced.

The bank has upgraded its recommendation for Transgaz stock from "keep" to "buy", to justify the fact that the target price is 16% above Thursday"s quotation of 222 lei/share.

In June, Government has decided that state owned companies and autonomous institutions would be required to pay 90% of their profits to the state budget, almost double compared to the current limit of 50% of their profits.

Raiffeisen mentions that this contribution would be raised for the fiscal year 2010. The bank initially expected that the new profit distribution rate would remain in effect for an indefinite period.

In turn, the appreciation of the dollar will increase the company"s revenues from the gas transport business. Raiffeisen has adjusted its estimates concerning the exchange rate, anticipating a higher appreciation of the Euro against the leu than initially estimated, as well as the appreciation of he dollar against the European currency.

For this reason, the revenues from the gas transit, which are mostly denominated in dollars, could increase by as much as 20% over the initial estimate for the reviewed period.

Following the raise of VAT from 19% to 24% and other governmental decisions in order to lower the budget deficit, Raiffeisen revised its GDP estimate downwards, from stagnation to a 3% contraction.

The bank also anticipates that gas consumption will be affected, as it revised its forecast concerning the growth of gas consumption from 9% to 7.5%.

Raiffeisen anticipates that Transgaz will make a net profit of 289.8 million lei, 349.1 million lei, and 343.3 million lei, respectively for the 2010-2012 period, compared to the previous forecast, of 278 million lei, 326.9 million lei and 312.7 million lei, respectively.