Release Date: August 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Fund's Net Asset Value (NAV) increased by 10.3% in the first half of 2024, indicating strong performance.
- Bucharest Airports reported an 18% increase in operating revenues and a 22% increase in operational profitability, driven by higher passenger traffic.
- Constanta Ports saw a significant increase in net income by 112% year-on-year, despite a slight decline in operating revenues.
- Salrom's operating profit increased significantly, and the company is considered a good candidate for a potential IPO.
- The Fund has distributed over RON28.7 billion ($7 billion) since 2010, showcasing a strong commitment to shareholder returns.
Negative Points
- The Fund's shares are trading at a significant discount, with a 40.3% discount for shares and 33% for GDRs.
- The total return for local shares and GDRs was negative in the first half of 2024, at -14.9% and -11.6% respectively.
- Romanian institutional shareholders have reduced their holdings in the Fund, indicating potential concerns or lack of confidence.
- There are ongoing legal challenges related to corporate governance, including the legality of Board appointments.
- The buyback program is currently suspended due to an ongoing tender offer process, which may impact the Fund's discount control mechanism.
Q & A Highlights
Q: If the prospectus is not approved by the FSA until the moment of the GSM, will the repurchase program not take place?
A: Correct. If the second point is approved at the shareholder meeting, the buyback program would be stopped following the application of the proceeds from the sale.
Q: Can you provide more details around the concentration on Solera and the challenges encountered for listing on the stock exchange?
A: The listing approval in principle was in July 2021, and the government approved the memorandum in July 2022. Challenges include corporate governance issues and the appointment of a Big Four auditor. Despite slow progress, we believe Solera is a viable candidate for listing and will continue discussions with the company and majority shareholder.
Q: What are the chances that the transportation sector company will be listed, and can you provide comments on this topic?
A: There is no clarity on which company should be listed. We believe Bucharest Airports would benefit from a listing to raise capital for expansion. We are willing to collaborate with the Ministry of Transport for a listing.
Q: Can you inform us which directors have been proposed so far?
A: No other directors have been proposed besides Franklin Templeton for a 12-month extension. The selection process for a fund manager is in the hands of the Board of nominees.
Q: What impact do you anticipate the buyback will have on the NAV objective of the fund?
A: The buyback program is a key part of the discount control mechanism. Limiting or banning the buyback could potentially be detrimental to shareholders, although it does not directly impact the NAV.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
