Transportadora de Gas del Sur Is Priced For Perfection After Q3, An Easy Hold
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Transportadora de Gas del Sur (TGS) experienced a significant boost in its transportation segment due to a 700% tariff increase, but faces risks from lagging inflation adjustments. The liquids segment saw a 50% YoY drop in operating income, while midstream revenues grew 17% in USD terms. Despite these factors, TGS's valuation remains high, with political, economic, and currency risks impacting future performance.
November 06, 2024 | 1:45 am
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NEUTRAL IMPACT
Transportadora de Gas del Sur's transportation segment saw a massive profitability boost due to a 700% tariff increase, but inflation adjustments lag, risking future profitability. The liquids segment faced a 50% YoY operating income drop due to maintenance and unfavorable FX rates, while midstream revenues grew 17% in USD terms. TGS's valuation remains high even under optimistic assumptions, with significant political, economic, and currency risks impacting future performance.
The 700% tariff increase significantly boosts the transportation segment's profitability, but the lag in inflation adjustments poses a risk to future profitability. The liquids segment's 50% YoY drop in operating income due to maintenance and unfavorable FX rates is a concern. Midstream revenue growth of 17% in USD terms is positive, but the overall high valuation of TGS, coupled with political, economic, and currency risks, suggests a neutral short-term impact on the stock price.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100