BST:T2K1

Stock Analysis Report

Transportadora de Gas del Sur

Executive Summary

Transportadora de Gas del Sur S.A. provides natural gas transportation and distribution services in Argentina.

Rewards

Trading at 77.5% below its fair value

Earnings are forecast to grow 34.07% per year

Earnings grew by 57.9% over the past year

Risk Analysis

High level of non-cash earnings

Has a high level of debt

Dividend of 9.32% is not well covered by earnings

Highly volatile share price over past 3 months



Snowflake Analysis

Undervalued with high growth potential and pays a dividend.


Similar Companies

Share Price & News

How has Transportadora de Gas del Sur's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: T2K1's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-5.4%

T2K1

5.9%

DE Oil and Gas

0.3%

DE Market


1 Year Return

-61.5%

T2K1

87.7%

DE Oil and Gas

13.8%

DE Market

Return vs Industry: T2K1 underperformed the German Oil and Gas industry which returned 48.3% over the past year.

Return vs Market: T2K1 underperformed the German Market which returned 17.1% over the past year.


Shareholder returns

T2K1IndustryMarket
7 Day-5.4%5.9%0.3%
30 Day-17.3%2.8%1.3%
90 Day-17.4%38.1%5.2%
1 Year-57.8%-61.5%94.0%87.7%17.4%13.8%
3 Year-30.7%-40.1%39.0%27.0%15.9%5.7%
5 Year144.5%110.2%342.3%274.4%27.9%10.6%

Price Volatility Vs. Market

How volatile is Transportadora de Gas del Sur's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Transportadora de Gas del Sur undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: T2K1 (€6) is trading below our estimate of fair value (€26.7)

Significantly Below Fair Value: T2K1 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: T2K1 is good value based on its PE Ratio (6.4x) compared to the Oil and Gas industry average (9.4x).

PE vs Market: T2K1 is good value based on its PE Ratio (6.4x) compared to the German market (20.6x).


Price to Earnings Growth Ratio

PEG Ratio: T2K1 is good value based on its PEG Ratio (0.2x)


Price to Book Ratio

PB vs Industry: T2K1 is overvalued based on its PB Ratio (2.2x) compared to the DE Oil and Gas industry average (1.1x).


Next Steps

Future Growth

How is Transportadora de Gas del Sur forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

34.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: T2K1's forecast earnings growth (34.1% per year) is above the savings rate (-0.4%).

Earnings vs Market: T2K1's earnings (34.1% per year) are forecast to grow faster than the German market (13.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: T2K1's revenue (26.3% per year) is forecast to grow faster than the German market (4.8% per year).

High Growth Revenue: T2K1's revenue (26.3% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: T2K1's Return on Equity is forecast to be low in 3 years time (19.3%).


Next Steps

Past Performance

How has Transportadora de Gas del Sur performed over the past 5 years?

70.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: T2K1 has a high level of non-cash earnings.

Growing Profit Margin: T2K1's current net profit margins (44.4%) are higher than last year (19.2%).


Past Earnings Growth Analysis

Earnings Trend: T2K1's earnings have grown significantly by 70.8% per year over the past 5 years.

Accelerating Growth: T2K1's earnings growth over the past year (57.9%) is below its 5-year average (70.8% per year).

Earnings vs Industry: T2K1 earnings growth over the past year (57.9%) exceeded the Oil and Gas industry -5.1%.


Return on Equity

High ROE: T2K1's Return on Equity (35.1%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Transportadora de Gas del Sur's financial position?


Financial Position Analysis

Short Term Liabilities: T2K1's short term assets (ARS20.0B) exceed its short term liabilities (ARS7.4B).

Long Term Liabilities: T2K1's short term assets (ARS20.0B) do not cover its long term liabilities (ARS36.8B).


Debt to Equity History and Analysis

Debt Level: T2K1's debt to equity ratio (73.8%) is considered high.

Reducing Debt: T2K1's debt to equity ratio has reduced from 118.6% to 73.8% over the past 5 years.

Debt Coverage: T2K1's debt is well covered by operating cash flow (43%).

Interest Coverage: T2K1's interest payments on its debt are well covered by EBIT (32.9x coverage).


Balance Sheet

Inventory Level: T2K1 has a high level of physical assets or inventory.

Debt Coverage by Assets: T2K1's debt is not covered by short term assets (assets are 0.7x debt).


Next Steps

Dividend

What is Transportadora de Gas del Sur's current dividend yield, its reliability and sustainability?

9.95%

Current Dividend Yield


Dividend Yield vs Market

company10.0%marketbottom25%1.3%markettop25%3.6%industryaverage5.8%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: T2K1's dividend (9.32%) is higher than the bottom 25% of dividend payers in the German market (1.38%).

High Dividend: T2K1's dividend (9.32%) is in the top 25% of dividend payers in the German market (3.53%)


Stability and Growth of Payments

Stable Dividend: T2K1's dividend payments have been volatile in the past 10 years.

Growing Dividend: T2K1's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (59.7%), T2K1's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: T2K1 is not forecast to pay a dividend in 3 years.


Next Steps

Management

What is the CEO of Transportadora de Gas del Sur's salary, the management and board of directors tenure and is there insider trading?

2.8yrs

Average management tenure


CEO

Oscar José Sardi (64yo)

0.8yrs

Tenure

0

Mr. Oscar José Sardi has been Chief Executive Officer of Transportadora de Gas Del Sur S.A. since April 30, 2019. Mr. Sardi served as Operations Director at Transportadora de Gas Del Sur S.A. since October ...


Management Age and Tenure

2.8yrs

Average Tenure

60.5yo

Average Age

Experienced Management: T2K1's management team is considered experienced (2.8 years average tenure).


Board Age and Tenure

3.5yrs

Average Tenure

52.5yo

Average Age

Experienced Board: T2K1's board of directors are considered experienced (3.5 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Alejandro Mario Basso (58yo)

    CFO & VP of Administration

    • Tenure: 3.3yrs
  • Oscar José Sardi (64yo)

    Chief Executive Officer

    • Tenure: 0.8yrs
  • Carlos Hector Sidero (63yo)

    Director of Human Resources

    • Tenure: 6.8yrs
  • Leandro Perez Castaño

    Finance & IR Manager

    • Hernán Diego Flores Gomez (53yo)

      Legal Affairs Vice President & Head of Market Relations

      • Tenure: 2.3yrs

    Board Members

    • Carlos Alberto Olivieri (69yo)

      Independent Director

      • Tenure: 10yrs
    • Gustavo Mariani (49yo)

      Vice Chairman of the Board

      • Tenure: 2.7yrs
    • Mariano Batistella (37yo)

      Director

      • Tenure: 3.5yrs
    • Carlos Alberto Di Brico (67yo)

      Independent Director

      • Tenure: 2.7yrs
    • Mauricio Edgardo Szmulewiez (59yo)

      Independent Director

      • Tenure: 3.8yrs
    • Sergio Benito Patrón Costas (44yo)

      Independent Director

      • Tenure: 3.8yrs
    • Ignacio Gustavo Álvarez Pizzo (34yo)

      Independent Alternate Director

      • Tenure: 3.8yrs
    • Luis Alberto Fallo (59yo)

      Chairman of the Board

      • Tenure: 2.7yrs
    • Gregorio Werthein (36yo)

      Director

      • Tenure: 3.5yrs
    • Luis Rodolfo Secco (56yo)

      Independent Director

      • Tenure: 2.7yrs

    Company Information

    Transportadora de Gas del Sur S.A.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Transportadora de Gas del Sur S.A.
    • Ticker: T2K1
    • Exchange: BST
    • Founded: 1992
    • Industry: Oil and Gas Storage and Transportation
    • Sector: Energy
    • Market Cap: AR$82.044b
    • Listing Market Cap: AR$1.238b
    • Shares outstanding: 792.70m
    • Website: https://www.tgs.com.ar

    Location

    • Transportadora de Gas del Sur S.A.
    • Don Bosco 3672
    • 5th Floor
    • Buenos Aires
    • Capital Federal
    • 1206
    • Argentina

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    TGSU2BASE (Buenos Aires Stock Exchange)YesClass B Common SharesARARSMay 1994
    TGSNYSE (New York Stock Exchange)SPONS ADR-EACH REPR 5 CLASS'B'ARS1USUSDNov 1994
    T2K1BST (Boerse-Stuttgart)SPONS ADR-EACH REPR 5 CLASS'B'ARS1DEEURNov 1994
    TGS NBMV (Bolsa Mexicana de Valores)SPONS ADR-EACH REPR 5 CLASS'B'ARS1MXMXNNov 1994

    Biography

    Transportadora de Gas del Sur S.A. provides natural gas transportation and distribution services in Argentina. The company operates through four segments: Natural Gas Transportation, Production and Commercialization of Liquids, Other Services, and Telecommunications. The Natural Gas Transportation segment transports natural gas through 5,706 miles of pipeline system to distribution companies, power plants, and industrial customers. As of December 31, 2018, it served 6.2 million residential, commercial, industrial, and electric power generation end-users. It also provides operation and maintenance services for the natural gas transportation facilities. The Liquids Production and Commercialization segment produces and commercializes natural gas liquids, such as ethane, liquid petroleum gas, natural gasoline, propane, and butane in Argentina and internationally. The Other Services segment offers midstream services, including natural gas treatment, separation, and removal of impurities from the natural gas stream, as well as natural gas compression. It also provides services related to pipeline and compression plant construction, operation, and maintenance; and generates steam for electricity production. The Telecommunications segment provides telecommunication services for telecommunication operators and corporate customers. Its telecommunication network includes a microwave digital network with synchronous digital hierarchy technology and a dark fiber optic network. The company was founded in 1992 and is headquartered in Buenos Aires, Argentina. Transportadora de Gas del Sur S.A. is a subsidiary of Compañía de Inversiones de Energía S.A. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/26 21:11
    End of Day Share Price2020/01/24 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.