For today we are bringing you an overview of the share price performance of various sectors in the regional market on a YoY basis to see how sectors performed during most of 2022.
For this, we observed primarily the median YoY share price performance of companies in our wider coverage from Croatia, Slovenia, Bulgaria, Romania, and Serbia.
The end of 2021 was marked by positive sentiment on the regional equity markets, following the high vaccination rates, while a similar positive trend continued in the beginning of 2022 with most industries being in the green. However, the tide has turned in the first quarter of 2022 with Russian invasion of Ukraine that spurred a flight from equity and strong volatility that countinues throughout the year. Consequently, the majority of sectors reported a negative YoY price movement with more than half of sectors that were in red reporting a double-digit decline.
Observing the graph below, we can see that the shipping sector has by far the largest increase with a median YoY share price increase of 10.5%. Shipping was primarily driven by Jadroplov, which noted a share price increase of more than 20%. Further, we note Atlantska Plovidba achieved strong results in the first half of 2022, but the returns diminished from that point – resulting in a more or less flattish price movement. However, the Shipping sector in the region outperformed other ones without a doubt.
The shipping is followed by Funds/REIT with also high median YoY share price performance of 8%. However, we note the sample for this category is relatively small and might not be representative on a wider scale. Energy and Infrastructure follow with a median YoY share price increase of 2.1% and 0%, respectively. Energy rounded up with a median return of 8%. This sector is mostly represented by Romanian companies with flattish returns on a YoY basis. However, we emphasize the price movement was volatile and if a slightly different time frame was used, returns could vary significantly due to high energy prices on a global scale.
However, each of the remaining sectors noted a negative YoY return with Construction and Telecommunication leading the list with 24.9% and 18.% decline, respectively. Telecommunication was primarily driven by Romanian Digi and Telekom Slovenije, both of which reported a double-digit decline. Furthermore, Banks and Food were also in red, decreasing by 13.4% and 13.3%, respectively. Tourism, Insurance, Pharma, Diversified and Industrials all noted a decline with 10.7%, 10.2%, 9.9%, 9% and 8.5% YoY decline, respectively. Looking at these sectors, we note that Pharma was primarily influenced by Krka with an almost 20% share price decline due to the geopolitical situation influencing the company’s operations. Further, Diversified noted a mentioned 9% decline which was primarily driven by Petrol’s high double-digit price decline. As we are all aware of, Petrol’s operations suffered due to the Croatian & Slovenian government interventions. This decline was slightly offset by Podravka’s flattish price development.
YoY Returns by sector (%)
Source: Bloomberg, InterCapital Research
At the end of December 2022, the total number of arrivals in Croatia amounted to 330.9k, which is an increase of 38% YoY. At the same time, tourist nights amounted to 839.5k, representing an increase of 32% YoY.
Recently, the Croatian Tourist Board (HTZ) published its latest report on the performance of the Croatian tourism industry, for the month of December 2022, and as such, for 2022 as a whole. In the report, we can see that the tourist arrivals and overnight stays have still increased compared to 2021’s levels, but the increase is a lot lower than the one recorded during the summer months. Considering that Croatian tourism is predominantly focused on summer leisure tourism, this isn’t surprising.
In terms of arrivals, December 2022 recorded a total of 330.9k arrivals, representing an increase of 38% YoY. Of this, foreign tourists accounted for 195.9k or 59%, while domestic tourists accounted for the remaining 135k or 41%. If we were to compare these numbers to the last year of “normal” operations before COVID-19, i.e. 2019, then the total arrivals are 12% lower, with domestic arrivals being only 1% higher, while foreign arrivals are 19% lower.
In terms of tourist nights, they amounted to 839.5k during December 2022, representing an increase of 32% YoY. Of This, foreign tourist nights amounted to 574.4k, or 68%, while domestic tourist nights amounted to 265.1k, or the remaining 32%. Compared to 2019, total tourist nights are 4% lower, with domestic tourist nights being 6% lower, while foreign tourist nights were 3% lower. Meanwhile, the average stay per person amounted to 2.54, representing a decrease of 4.1% YoY.
The decrease in both the tourist arrivals and tourist nights, especially foreign ones is a negative trend we have seen this year, mainly due to higher costs of vacation in Croatia, due to higher accommodation, food, and service costs. At the same time, the budgets of visitors are also somewhat lower, especially after more than a year of elevated inflation. Finally, as already mentioned, Croatian tourism is extremely focused on the summer season, and as such the lower number of arrivals/nights is quite low when compared to the summer months.
Total tourist arrivals and tourist nights in Croatia (January 2019 – December 2022)
Source: HTZ, InterCapital Research
This is also evident if we look at the accommodation choices of the tourists; the majority of tourists in December stayed in hotels (57% of the commercial accommodation and commercial accommodation itself accounted for 94% of the total accommodation chosen for overnight stays). Following it, we have private accommodation at 27%, camps at 4%, and the remaining 12% split between other types of accommodation. Also, if we looked at the tourist nights by country of origin, the largest percentage goes to domestic tourists at 38%, followed by Slovenia and Austria, both with 11%, Germany and Bosnia and Herzegovina, both with 8% and Italy, at 6%. Furthermore, looking at the tourist nights by country, the City of Zagreb achieved the largest amount, followed by Kvarner, Istra, Splitsko-dalmatinska, and Dubrovačko-neretvanska.
All of these examples are mentioned to prove a point; the majority of arrivals/nights not in the summer season are orientated more towards local attractions such as the Advent in Zagreb, most of the arrivals are as such in hotels, and the majority of tourists are domestic tourists, meaning people spending their free time inside of Croatia but not in their county of origin.
Moving on to the data for 2022, total arrivals amounted to 18.9m an increase of 37% YoY. Of this, foreign tourists accounted for 16.2m, an increase of 42% YoY, while domestic tourists accounted for 2.6m, an increase of 13% YoY. Meanwhile, tourist nights amounted to 104.8m, an increase of 25% YoY. Of this, foreign tourist nights amounted to 92.3m, an increase of 28% YoY, while domestic tourist nights amounted to 12.5m, an increase of 2% YoY.
Compared to 2019, the total arrivals in 2022 are 9% lower, while total nights are 4% lower. What is also interesting to point out is the revenue achieved in the tourist industry. According to the latest data from the Croatian National Bank, the revenue from foreign tourists amounted to EUR 8.47bn in Q3 2022, which is an increase of 27% YoY. Compared to 2019, this is an increase of 28%. Looking at the 9M 2022, we can see that the total revenue from foreign tourists amounted to EUR 11.64bn, an increase of 43% YoY, and 23% compared to 2019.
Revenue of the tourism industry in the first 9 months (EURm), YoY Growth rates (%), 2015 – 2022
Source: HNB, InterCapital Research
What does all of this data show us, can this year be called a “record” year? In a sense, yes and no. Croatia did manage to recover and even record significant growth in the tourism industry in 2022. Tourist arrivals and nights are almost at pre-pandemic levels. But this almost is the key word. If the revenue increased so much and the tourist nights are somewhat lower, this would mean that the main driver of the revenue growth was the high prices. High prices might have been more easily absorbed in 2022, with all the savings people had after basically 2 years of not being able to travel, and when inflation and cost of living in general, were still largely under control. 2023 however? With a recession looming and savings being chipped away by inflation? While at the same time, the tourist companies are also under pressure to increase prices due to their own expenses growing. 2023 will prove to be quite an interesting year for Croatian tourism indeed.
Yesterday, Ericsson NT announced a signing of a Traffic Management Solution Contract with the City of Split, worth EUR 1.8m without VAT.
Through this, Ericsson NT has contracted works worth more than EUR 1.8m without VAT for the project “Introduction of Intelligent Transport Systems in the Functional Traffic Area of the City of Split”. The works are related to the implementation of a software solution for traffic management in the control center and informing passengers, and the delivery of the communication backbone.
Explaining this in more detail, the Company said that this will mean that they will establish and maintain a software solution for the Traffic Control and Surveillance Center, including the creation of an information backbone for the “Traffic Management – Traffic Light System and Adaptive Traffic Management” subsystem, as well as develop and implement a mobile app for informing passengers.
The project, whose client is the City of Split and which will be realized by King ICT and Ericsson NT, is worth more than EUR 9.5m without VAT and is co-financed through the Operational Program Competitiveness and Cohesion 2014-2020 of the European Union. The System and equipment included in this project will be integrated and implemented according to the design and build principle, and the expected duration of the contract is 32 months.
Furthermore, according to the Company, due to the intelligent transport system’s technological performance, will contribute to the increase in traffic efficiency, safety, and sustainability, as well as the reduction of traffic congestion and the emission of harmful gases.
Finally, Ericsson NT notes that they are leading digital transformation in numerous industries and areas of human activities. In addition to solutions for the operator segment, they also create innovative ICT solutions related to healthcare, national and public security, state administration, transport, utility services, and multimedia communication.