EPCG’s CEO Ranko Vojinović has announced that the firm’s net earnings came in at € 37.5m for 1H09. The main positive contributor to the result was the fact that EPCG (Bloomberg: EPCG ME) breached an agreement on the import of electricity for 2009, as this enabled the firm to achieve a better price on the market and reduce import costs. The profitability achieved in 1H09 enabled the company to cover losses from the previous three years. Favourable weather conditions during 2009 brought additional efficiency gains for EPCG. Electricity production was 24.2% above plan on 20 July 2009.
Our view:
We expect a positive market reaction to this news as the CEO’s statement confirms previous speculation about excellent results for 1H09. However, we do not expect the price to rise above € 8.4 per share, which is the price offered by the recently elected winner of the privatization tender. EPCG’s shares currently trade at € 7.5 per share. The stock is not widely covered and the company does not provide common-size periodical financial statements.