Today, we are presenting an overview of the P/E ratio and the cash-adjusted P/E ratio for Croatian blue-chip companies, based on the data reported for the first quarter of 2024.
First, a few disclaimers are necessary. The data for balance sheet items, such as cash and cash equivalents, is derived from the Q1 2024 reports. Profit and loss items, specifically net profit, are based on trailing twelve months (TTM) data ending in the first quarter of 2024 to ensure a consistent comparison. Hrvatska poštanska banka (HPB) has been excluded from this analysis as it operates in the financial and banking sector, making it incomparable with other companies presented here. Although only Adris (pref.) is part of the CROBEX10 index, both regular and preferred shares of Adris grupa are included in this analysis. The cash and cash equivalents are applied to both share types, so the P/E and cash-adjusted P/E ratios represent Adris grupa as a whole. Additionally, the net profit to majority shareholders is used in the analysis, and adjustments have been made for treasury shares held by the respective companies. By considering these factors, we aim to provide a clear and accurate representation of the P/E and cash-adjusted P/E ratios for the top Croatian companies.
P/E of Croatian blue-chip companies (TTM Q1 2024 results)
Source: Companies’ data, ZSE, InterCapital Research
Starting with the P/E ratios, Span recorded the highest at 152x. This increase is attributed to a combination of a decreased bottom line and a rising share price. Despite the company’s sales growing by 33% YoY, net profits fell by 31% due to increased OPEX, primarily driven by the hiring of 200 new employees needed to support future sales growth. As future sales are expected to continue growing, Span’s net income should recover, leading to lower P/E in the future.
Valamar Riviera recorded the next-highest P/E at 25.7x. The company saw significant top-line growth of 58% YoY in Q1 due to an earlier start to the tourist pre-season, especially around Easter. However, this also led to many expenses typically covered in the second quarter being incurred in Q1, resulting in an 8% decrease in net profits YoY. With earnings down and the share price up by 13.2% YTD, the P/E ratio increased accordingly. Atlantic Grupa holds third place with a P/E ratio of 22.7x. This slight decrease is due to the share price remaining stable while net income saw an insignificant increase. On the flip side, Atlantska Plovidba and AD Plastik recorded negative P/E ratios. Atlantska Plovidba had the lowest at -114.8x. Despite achieving a positive bottom line in Q1 2024, the company still has not attained a positive TTM net income after recording losses in the three quarters of 2023. AD Plastik also posted a negative P/E of -74.9x. Although the company achieved a positive bottom line in Q1 2024, it was insufficient to offset losses from 2023.
Cash-adjusted P/E of Croatian blue chips companies (TTM Q1 2024 results)
Source: Companies’ data, ZSE, InterCapital Research
Moving on, we present the cash-adjusted P/E ratios, as Croatian blue-chip companies typically hold substantial amounts of cash and cash equivalents. The most significant change is observed in Span, where the cash-adjusted P/E drops by 27.2x, bringing it down to 124.8x. This is followed by Adris Grupa, which sees a decline of 13.1x, and Ericsson NT, with a 3.7x reduction in its cash-adjusted P/E.
Cash & cash equivalents (Q1 2024) to current Market cap of Croatian blue-chip companies (%)
Source: Companies’ data, ZSE, InterCapital Research
In the graph above, we illustrate the percentage of each company’s market capitalization that is comprised of cash and cash equivalents. Adris Grupa leads with cash accounting for 61.4% of its market cap, followed by Atlantska Plovidba at 50.8%. Ericsson NT holds the third-highest percentage, while Podravka has the lowest at 4.6%.
