ZF Today’s opening at the Stock Exchange. Istvan Sarkany, BVB investor: I have done…

♦ Three of the four issuers show returns of over 100% in the last 12 months ♦ “In two or three years, I expect (DN Agrar – ed.) to be a company twice as big as now, at least”.

Transport Trade Services (stock symbol TTS), the performer of last year’s BET index, remained at the beginning of 2024 the main investment for some of the investors on the capital market in Romania, including Istvan Sarkany, who says that the freight carrier on the Danube could exceed the estimates from the 2024 revenue and expenditure budget.

“I did a little cleaning in the portfolio. The largest holdings are the same as last year. I remained heavily exposed to TTS, which I still trust will deliver quite good results this year as well. I think their budget is quite pessimistic in the sense that they do not anticipate any positive surprises. I hope that they will do even a little better than what they budgeted”, says Istvan Sarkany.

In second place is Simtel Team (SMTL), the leader of the renewable energy market in Romania, which published good results for 2023, the investor continues. Also, the BVC came in line with the expectations of the market participants, and the company recently obtained a financing of approximately 12 million euros for the construction of the photovoltaic power plant in Giurgiu, the money being attracted through the National Recovery and Resilience Plan.

“I was pleasantly surprised, in the sense that, if it had to be financed from its own funds, it would probably have needed an infusion of capital. That way, the chances of needing a capital increase have decreased.”

The following positions are occupied by DN Agrar (DN), the largest dairy cow breeder in Romania, and the geological prospecting company Prospectiuni Bucharest (PRSN), controlled by businessman Ovidiu Tender.

DN Agrar had a net profit of 10.6 million lei in the first nine months of last year, up 249% compared to the same period in 2022. The net result recorded by Prospections was 25.3 million in Q3/2023 , plus 166%.

“Prospectiuni seems to me to be a turnaroud story, it was insolvent at one time, they had and maybe still have problems related to the reputation of the majority, which may be due to a good part of the investors on the one hand. But operationally, at least, the company performs very well. Last year it finished about 30 million lei in net profit, which makes it have a multiple PER of 5x-6x”, adds Istvan Sarkany.

PRSN shares are trading up 93% in the last 12 months on the BVB, while DN shows an advance of 124%. SMTL and TTS are up by 107% and 120%, respectively. By comparison, the benchmark BET index registered an appreciation of almost 40% during this period. Including dividends (BET-TR), the dynamics of the local market is plus 49%.

“The luck (DN Agrar – no) is that they have increased milk production very well and continue to invest in the expansion of farms. It was clear that the price of milk could not remain at the peaks of a year ago, but operationally they are taking correct steps. They invest in efficiency and at the same time in expansion and the results are visible. Margins improve every quarter compared to the previous quarter, so it is clear that the investments are paying off in the medium term. In 2-3 years, I expect it to be a company twice as big as it is now, at least.”