Romanian-Moldovan winemaker Purcari (BVB: WINE) announced its sales rose by 22% y/y to RON 370 million (EUR 74 million), and its margins remained robust, according to the 2023 financial results sent to investors.

The normalized profit margin, after filtering out the one-off profit (RON 28.3 million) from 2022, improved to 16% in 2023 from 14% in the previous year. Normalized EBITDA margin remained at 27%.

With a RON 59.6 billion (EUR 12 million) net profit in 2023, the company's market capitalization dropped to RON 580 million (EUR 116 million) after the stock sell-off driven by the geopolitical concerns prompted by (February 22) comments of a low-level politician in Moldova's separatist region Transnistria in the week before the company's 2023 financial release.

On February 24, Raiffeisen issued a buy recommendation for Purcari's shares, with a target price of RON 18 (compared to RON 14.4 on February 28 and RON 15.4 before the sell-off). On February 23, Purcari's shares hit the lowest level (RON 14) before slightly recovering in the following days.

Commenting on the rising tensions surrounding Transnistria, which sent the company's shares 8% down within two trading days, the management of Purcari assured that the "risk has not materialized at the said Congress [where the separatist region was expected to ask to be annexed by Russia], confirming futility of such speculations."

Furthermore, the company explains why radical developments in Transnistria are fundamentally unlikely.

Transnistrian elites have a strong vested interest in keeping the status quo, not provoking Ukraine as some 2/3 of Transnistrian exports go to EU markets, while the vast majority of the population hold Moldovan, Ukrainian, and/or Romanian passports, though clearly pro-Russian leaning. Russia has limited real levers in the region, Purcari also stressed.

Purcari doesn't have operations in Transnistria.

iulian@romania-insider.com

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