By the end of 2023, Hidroelectrica recorded revenue growth of 30% YoY, an EBITDA increase of 33%, and a net income of RON 6.34bn, an increase of 42% YoY.
In total, Hidroelectrica’s revenue amounted to RON 12.2bn during 2023, growing by 30% YoY. Breaking the revenue down, total energy sales amounted to 19.34k GWh, growing by 33% YoY. Of this, Energy sold generated by H2O amounted to 17.6k GWh, an increase of 30% YoY, while external acquisitions amounted to 1.7k GWh, an increase of 70% YoY. The increase in energy produced and sold came due to the improvement in hydrological conditions in 2023, with the quantity of energy produced above the multiannual average.
Wholesale revenues meanwhile, grew by 14% YoY, with the wholesale energy sold increasing by 23% YoY to 12.66k GWh, while the wholesale price decreased by 7%, to 493 RON/MWh. Hidroelectrica further notes that this was under the influence of new operating conditions of the wholesale market (implementation of MACEE, starting 1 January 2023), as well as the variation in the SPOT price in 2023 (-60% YoY). Moving on, supply revenues related to active energy amounted to 3.49bn, a 132% increase YoY, due to the increase in the portfolio of clients, as well as the increase in the average selling price. Transferred costs (pass-through) also increased, by 126% YoY to RON 1.45bn, as a result of the increase in the client portfolio to which the increase in the regulated tariffs is added.
On the other hand, Balancing revenues decreased by 61% YoY to RON 567m, with the reduction in both the quantity of electricity (-25% YoY, to RON 433 GWh), as well as the lower balancing price (-48% YoY, to 1,310 RON/MWh). Finally, other revenues from customer contracts increased by 137% YoY to RON 154m, and this mainly relates to services provided by Hidroelectrica as the Party Responsible for Balancing. The growth in revenue in this segment then, was influenced by the behaviour of all participants in the electricity market regarding the management of imbalances.
Hidroelectrica revenue composition breakdown (2023 vs. 2023, RONm)
Source: Hidroelectrica, InterCapital Research
In terms of OPEX, it grew by 19% YoY, to RON 5.1bn. Looking at the largest categories of OPEX, transport and distribution of electricity increased by 143% YoY to RON 1.21bn, due to the evolution of the quantities delivered on the portfolio of supply, and of the regulated tariffs. Depreciation remained roughly the same (+3% YoY), while employee benefits expenses increased by 14% YoY to RON 717m. The increase here was mainly due to salary growth resulting from the negotiations with the employees’ union against the background of double-digit inflation recorded at the end of 2022, as well as the increase in the no. employees in the Group.
Next up, we have Turbinated water, which recorded an increase of 42% YoY, to RON 639m, mainly as a result of the increase in the amount of processed water used for electricity production, as well as the increase in the tariff set by ANAR to RON 1.4 per thousand cubic meters (2022: RON 1.23 per thousand cubic meters). Electricity purchased meanwhile, recorded a decrease of 30% YoY, due to the decrease in the average purchase price of electricity in 2023. Green certificate expenses also grew, by 62% YoY to RON 297m, due to H2O’s need to purchase green certificates through the Centralized Anonymous Spot Market for Green Certificates, to cover the consumption of final customers in the supply portfolio of the Company.
One other notable change recorded during the year was the net impairment loss on PP&E and intangible assets, which grew by over 8.8x YoY to RON 237m, mainly as a result of the impairment test performed on assets under construction at the end of 2023. Finally, tax for electricity producers dropped significantly, by 67% YoY to RON 225m, due to the implementation of the centralized purchase mechanism through which electricity producers will sell the amount of electricity available to OPCOM, at the fixed price of RON 450/MWh, as well as the decrease in the electricity sales prices in 2023 compared to 2022.
Hidroelectrica operating expenses composition breakdown (2023 vs. 2022, RONm)
Source: Hidroelectrica, InterCapital Research
Due to the faster revenue than OPEX growth described above, Hidroelectrica’s EBITDA grew by 33% YoY to RON 7.98bn. This would imply an EBITDA margin of app. 65%, representing an increase of 1.8 p.p. YoY. Finally, net income also grew, increasing by 42% YoY to RON 6.34bn. This would also mean that the net income margin improved, by 4.5 p.p. YoY to 51.8%.
Hidroelectrica key financials (2023 vs. 2022, EURm)
Source: Hidroelectrica, InterCapital Research
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At the share price before the announcement, this would imply a DY of 4.7%. The ex-date is set for 29 April 2024, while the payment date is set for 24 May 2024. Furthermore, when the date of the current SBB program passes (18 November 2024), a new share buyback, in the period of 5 years will commence, which we will detail below. The announced strategic investment plan implies an increase in EBITDA to EUR 150m, from EUR 109m in 2023. The plans entail EUR 450m investments by 2026, with the biggest one being the continuation of premium hotel Pical 5* resort and investments in Rab 4/5* resort.
Yesterday, Valamar Riviera published a GSM call, which will be held on 24 April 2024. In the call, among other things, the Company also made a proposal for the distribution of profit. While the 2023 net profit will be transferred to retained earnings, a dividend payment in the amount of EUR 0.22 per share will be paid out from the retained earnings of the years 2016, 2019, and 2021. At the share price before the announcement, this would imply a DY of 4.7%.
The ex-date is set for 29 April 2024, while the payment date is set for 24 May 2024. Lastly, Valamar Riviera also noted in its dividend policy, that in the forthcoming period, the Company will aim for a DY of 4% compared to the average share price achieved in the last quarter of the previous year. More details regarding the Company’s dividend policy can be accessed here.
Valamar Riviera dividend per share (EUR*) % dividend yield (%) (2015 – 2024)
Source: Valamar Riviera, InterCapital Research
*DPS converted using the average yearly EUR/HRK exchange rate from the CNB
Regarding the share buyback program, Valamar Riviera has an active one already, which will end on 18 November 2024. Within the GSM call, the Company proposed that once that date passes, a new share buyback, for the period of 5 years will commence. In terms of conditions, the maximum amount of bought-back shares cannot exceed 10% of the share capital of the Company. The lowest price cannot be less than 50% of the average price in the 30 days preceding the day of the buyback of shares. In the same manner, the highest price cannot be 20% higher than the average price in the 30 days preceding the day of the buyback. Finally, the price of the buyback, measured by the EV/EBITDA indicator, can amount to 11x EBITDA at its maximum.
In regard to its development and investment strategy, Valamar Riviera noted that the SB adopted the Group’s business strategy until 2026. The strategy is based on the investment plan amounting to EUR 450m, aimed at building Pical and Rab premium resorts, raising the quality of hotels and campsites, internationalizing, and investing in socially responsible and sustainable tourism projects.
Valamar’s strategic goals include achieving double-digit business and company value growth based on the comparables multiples valuation approach. After implementing the strategic initiatives, the expected EBITDA will amount to EUR 150m, with an average annual earnings growth of 11% compared to 2022. The Company plans to increase revenue to EUR 500m, with 50% generated in shoulder seasons and as much as two-thirds of revenue coming from direct sales. The plan is to improve working conditions further, raise wages, focus on creating jobs with year-round income (over 50%), retain local employees (70%), and attract seasonal returnees (60%).
The new strategy focuses on holiday tourism, good for destinations, residents, guests, and employees while creating new value for investors. Valamar will continue to invest in sustainable tourism and socially responsible business.
Furthermore, the Company SB also gave final approval on the continuation of investment in Pical Resort 5*, Valamar Collection in Poreč, the largest investment in Croatian tourism, worth EUR 139m, as well as its consent regarding investment financing. The second strategic project in the first phase of Rab Resort 4/5* construction is Suha Punta, worth EUR 54m, approved by Imperial Riviera’s SB. Construction will begin this year, with a planned opening in the summer of 2025. More details are available in the Company’s announcement, which can be accessed here.
During FY 2023, Banca Transilvania recorded NII growth of 17.8% YoY, NFCI increase of 10%, and a net income to majority of RON 2.98bn, a 19.9% increase YoY. The group’s NPL ratio stood at 1.98%.
Starting off with the net interest income, it amounted to RON 5.2bn during FY 2023, a 17.8% increase YoY. This came as a result of an increase in the lending activity to both households and corporate clients, as well as interest rates being higher compared to last year. In terms of the net fee and commission income, during FY 2023, it increased by 10% YoY to RON 1.28bn. This was supported by the increase in the number of transactions, the number of clients, and the diversification of the operations available to customers. The last component, net trading income, decreased by 4.2% YoY to RON 657m during 2023 on the back of lower income from interest rate and exchange rate derivatives, which was partially offset by higher income from foreign exchange transactions. The group’s non-performing loans ratio stood at 1.98%.
In terms of operating expenses, OPEX grew by 18.1% YoY to RON 3.5bn during the period. Breaking this down further, employee expenses grew by 18.8% YoY, amounting to RON 1.97bb. This increase came due to salary increases, benefits granted to employees to support them against the backdrop of inflationary pressures, as well as an expansion in the employee base. Banca Transilvania also recorded lower impairment (or rather a reversal of impairment) of financial assets not measured at fair value through P&L, which declined by 23.9% to RON 420.7m, also positively influencing the result. Due to all of these developments, the net income to majority also grew significantly, increasing by 19.9% YoY to RON 2.98bn during FY 2023.
Banca Transilvania key financials (FY 2023 vs. FY 2022, RONm)
Source: Banca Transilvania, InterCapital Research
Moving on to the balance sheet, during FY 2023, the total assets amounted to RON 169.2bn, an increase of over 20% YoY. Group’s placement with banks and public institutions increased significantly, more than 2x meaning Banca Transilvania issued more loans. Delving into this further, financial assets measured at FV through OCI, decreased by 6.6% YoY to RON 40bn. This basically means that the various debt and equity instruments decreased in value as compared to last year. In terms of other categories, loans and advances to customers grew by 11% YoY to RON 75.6bn. Finally, Cash and current accounts with Central Banks grew by 66.8% YoY to RON 24.3bn, reflecting better conditions currently offered on deposits at the Central Banks.
On the other hand, total liabilities grew by 18.5% YoY to RON 155.3m during FY 2023. This came primarily as a result of higher deposits from customers, which grew by 15.3% YoY to RON 138.1bn on the back of higher interest rates customers can achieve. Loans from banks and other financial institutions also increased, by almost 2x YoY to RON 9.5bn, while deposits from banks decreased by 38.4%, to RON 138m. Finally, other financial liabilities increased by 43.3% YoY to RON 2.5bn, which was supported by higher amounts under settlement, and higher amounts of dividends payable.
If you would like to read the entire FY 2023 report, click here.