For today, we decided to present you with a YTD performance of Croatian and Slovenian Blue-Chip Companies.
As visible from the graph, among the CROBEX10 companies, only 2 out of 10 are in green on a YTD basis. To be specific, Podravka leads the list with a YTD increase of 5.5% with Valamar Riviera following the list with an increase of 1.8%. On the flip side, AD Plastik reported the highest YTD decrease amounting to -5.4%, followed by Arena Hospitality Group and Končar, both amounting to -3.2% YTD.
Podravka’s share has in this year continued its strong performance from 2021, when it was up 30% YoY. The company announced last week that its Supervisory Board has confirmed its five people Management Board for a five-year term and Ms. Dalić will continue to lead the Board. Last year in June the company has announced main guidelines of its strategy until 2025 while in December it announced their 3 -year business plan outlines. Podravka’s management decided in its long-term strategy to keep investing in the business to achieve operating efficiencies. Introduction of new logistic distribution centre, that will be located in close vicinity of their production facilities, is one of them. It will start operating from 2024 and it will ensure that company improves its profitability. Podravka has been deleveraging their operations for several year now, which led to the company recording their lowest level of indebtedness and at 9M 2021 it net debt stood at HRK 450m. Strong balance sheet has supported it through times of pandemic, while it can also gives the company potential to choose when deciding on an M&A target. In order to reach 3x EBITDA Podravka Group could take on almost HRK 1.4bn of additional debt. Translated in EUR this comes to more than EUR 183m. If Podravka would take over another company that is not leveraged up to it full potential, this amount could even be higher.
When we look at AD Plastik, we can say that its price has still been under pressure due to semi-conductor chip shortage and its influence on automobile industry. Original Car Manufacturers, the main clients of AD Plastik, are still not significantly increasing the volumes of spare parts from their suppliers due to delays in the production of finished products. Demand for semi-conductor products will continue, so the supply chain is likely to remain very tight well into 2022. As a reminder, AD Plastik’s quarterly revenue in 2021 Q3 was down 29% YoY. Revenue of Ad Plastik is also expected to follow this pattern and slow recovery is expected to start in the following quarters. Increased semiconductor capacity from all the equipment installed will give rise to a semiconductor overcapacity in 2023, when further rebound of AD Plastik revenues is expected. Albeit still not back to 2019 level, when their revenue reached HRK 1.5bn.
YTD Performance of Croatian Companies
In Slovenia, most blue chips noted a YTD increase, with Petrol leading the list (+4.6% YTD). Cinkarna Celje, Telekom Slovenije, Triglav and Luka Koper follow the list with an increase of 4.2%, 3.2%, 2.4% and 1.6%, respectively. Meanwhile, NLB noted a 1.7% YTD decrease, while Krka noted a 1.8% YTD decrease.
NLB share came under pressure last week as Slovenia passed the CHF loans law requiring all banks to reimburse their customers for interest paid above FX cap that is set at 10% on the exchange rate between Swiss francs and the Euro rate, for all the loans taken in the period from 2004 to 2010. Banks will file an initiative with the Slovenian Constitutional Court to initiate proceedings to assess the constitutionality of the law and a proposal to suspend enforcement. They will also ask for suspension of the application of the law until the review of its constitutionality will be know. NLB Group has last week published the announcement on LJSE where it estimates potential negative pre-tax effect of EUR 70m-75m if the suspension of the law could not be achieved. To put things into a perspective, this accounts for broadly speaking a quarterly EBT of the Group. More on this topic you can read here.
YTD Performance of Slovenian Companies