Today, we bring you our updated overview of the indebtedness and capital structure of Slovenian companies that comprise the SBITOP index using the H1 2023 results. It should be noted that we excluded NLB Banka, Triglav, and Sava Re from this comparison due to the nature of their business operations.
At the same time, Cinkarna Celje and Krka operate at a negative net debt, meaning their cash position (short-term financial assets + cash and cash equivalents) exceeds their financial debt. Because of this reason, they were excluded from the net debt/EBITDA graph. Of the remaining Slovenian blue chips, Petrol has the highest net debt/EBITDA ratio of 3.1x. It should also be noted that Petrol is currently under a lot of persisting pressures regarding its margins and financial position due to government regulation of petrol, electricity and gas prices. However, Petrol showed recovery looking at this ratio due to an improvement in EBITDA. If we were to look at EV/EBITDA on a Q1 basis, the ratio would amount to 5.4x (taking TTM results). Looking at this ratio, we can clearly see signs of stabilization. Further, Telekom Slovenije has a net debt/EBITDA ratio of 1.8x. Considering that Telekom Slovenije operates in the telecommunications industry, where investments into new infrastructure (and thus the need for a lot of cash to finance these projects) are taken in the form of debt, the Company’s net debt is at a higher level in comparison to their EBITDA. Finally, Luka Koper showed a positive net debt level in H1 results (which was not the case with Q1 results). However, we must note that net debt is barely positive and therefore, the company’s net debt/EBITDA amounted to 0.3x, lowest among the all observed companies.
Net Debt/EBITDA
Source: LJSE, InterCapital Research
We looked at how much additional debt the companies could take in order to reach 3x EBITDA, which in the region is considered a breaking point and a red flag in terms of indebtedness. Further, we note that Petrol’s deviation obviously comes from much lower TTM results due to government regulation. The situation should stabilize and improve in the upcoming period. Therefore, Petrol “broke” the red flat limit. However, from a valuation perspective, one can conclude that the market expects recovery/growth in Petrol’s profitability, taking the Group’s P/E ratio of 15.2x.
Potential Additional Debt (EUR m) to reach 3x EBITDA
Source: LJSE, InterCapital Research
We also took a look at the capital structure of the observed companies. Cinkarna Celje leads the way with virtually 100% equity, followed by Krka with 99.5%, Luka Koper with 81.7%, Petrol with 62.6% and Telekom Slovenije with 60.1% of equity in its structure of financing. Taking only the latest quarter into account, no major changes occurred in the capital structure of Slovenian blue chips.
Capital Structure of Select SBITOP Companies
Source: LJSE, InterCapital Research
