Romanian Property News

It’s been a while since anything but housing came up on the website. However, next week it’s a special occasion: the Transgaz shares go live on the Romanian Stock Market. Not having any financial analysts amongst my friends, I’ll keep this brief, more of an announcement.

Transgaz Medias is the company that transports natural gas throughout Romania. For the UK readers, it is the equivalent of Transco (I know that ,meanwhile, they became the National Grid; if you still don’t know what that is, have a look at the website). Is it profitable? Well…only if people need gas in their homes (that is a big YES!). It does excellent, as it is a monopolist company, without competitors and plenty of demand, so far owned by the state. Is it worth buying shares for Transgaz? The brief answer is: (at least) very likely!

There is no exact precedent, but there are two very positive events that indicate a positive outcome of potential investors. First, in the summer of 2006, the Transelectrica (the company that transports electricity throughout Romania) shares went on the Romanian Stock Exchange. From a starting asking price of 22.8RON (which is just over €6), after a month of trading, the shares reached 29.1RON (almost €8) and a month later they reached 33.6RON (over €9) – a nice 50% profit over 2 months. Second event was an initial public offer which took place last November when a limited number of shares could be purchased for a share price of €57. Apparently, the offer was rather tempting – the Transgaz shares were oversubscribed 3 to 1! So, while it might be a ‘spicy’ investment, as Transgaz won’t sell itself cheap, it’s one likely to bring some benefits in the long term. To follow up on that, based on the €57/share, some analysts estimated that the recovery period for buying a share, based on the dividends, will be around 13 years for Transgaz; in comparison, the average period of share price recovery for the successful shares on the UK and US stock markets revolves around 15-20 years.

The listing of Transgaz shares on the Bucharest Stock Exchange seems to be almost ignored by the media (you can see an announcement related to it here) – the main reason behind the lack of details is the secrecy of the event. So far, the company was keen only to indicate the day when the listing will take place: 23rd of January. We’ll come back with further details once the listing is on; meanwhile, you might want to cast an eye on Transgaz or get in touch with your stockbroker…