Today, we decided to present you with a brief analysis of cash per share of Croatian companies.

In September, Croatian companies published their H1 results, so we decided to update our cash per share analysis. The analysis is done in order to see the strength of the balance sheet and how liquid selected Croatian companies are. This figure as the percentage of a company’s share price can give us more insight on the company’s strength on returning the money to shareholders (either through dividends or buybacks), paying down debt etc.

Cash per share of Croatian Blue Chips

It is important to note that looking at solely cash per share of a company could lead to misleading conclusions without also taking into consideration the company’s indebtedness.

A high level of cash per share indicates a solid performance of the company, reinsuring the shareholders that the company is operating with “enough room” to cover for any potential difficulties and that the company has adequate capital.

Cash per share as a % of share price

As visible in the graph, of the selected companies, Končar operates with the highest cash per share as a percentage of their current share price of 38.2%, while their cash per share amounts to HRK 275.2. Adris (pref.) comes next with 36.2%. Ericsson Nikola Tesla with 19.8% is third on the list. Valamar Riviera and HT follow with 17.7% and 17.1%, respectively.

On the flip side, Optima Telekom has the lowest cash per share, both relative and percentage of HRK 0.04, which translates into 0.84% of its current share price.

In the graph below you can see the cash position of selected Croatian companies as the mid of September 2021. As visible from the graph, two Croatian companies breach the billion HRK mark – Adris with HRK 2.65bn and HT with HRK 2.60bn, while Končar is at HRK 700m.

Cash Position of Croatian Blue Chips (HRK m)*

 *Cash and short term financial assets (from H1 2021 reports)

According to S&P, the high ratings reflect the Group’s very strong capitalization and its stable, strong earnings, supported by underwriting discipline, sound reinsurance protection and economies of scale and other advantages of its dominant market position in the region and Slovenia.

Following its regular annual revision on 13 September 2021, S&P Global Ratings reaffirmed the “A” Long-Term Credit Rating and Financial Strength Rating with a stable medium-term outlook of Triglav Group. The high ratings reflect the Group’s very strong capitalization and its stable, strong earnings, supported by underwriting discipline, sound reinsurance protection and economies of scale and other advantages of its dominant market position in the region and Slovenia. The “A” credit rating exclusively reflects the Group’s stand-alone credit risk profile.

In its report, S&P again assessed the business risk profile of Triglav Group as strong and its financial risk profile as very strong. The leading position in the Slovenian market enables the Group to implement economies of scale, which it complements with its strong brand, diversified product range and regionally diversified sales network. By maintaining its client-centric approach, the Group ensures profitable operations in both activities, insurance and asset management. Underwriting discipline was key for the Group’s sound performance in the challenging conditions due to the pandemic in 2020 and the first half of 2021.

According to S&P, the Group’s stable risk profile benefits from its conservative investment policy and effective reinsurance protection. The latter was retested in 2020 by a very intense natural catastrophe season (two earthquakes in Croatia and hail storms in three markets) and again proved to be effective. Its investment portfolio is of high quality and well-diversified, with most assets invested across the eurozone. The risks of life insurance business with guarantees are limited and mitigated by adequate management of provisions.

The medium-term outlook reflects S&P’s expectations that the Group will continue to effectively implement its business strategy at least over the next two years, focusing on growth and further diversifying its operations. The agency expects that despite the pandemic and the turn in the economic cycle the Group will sustain strong, stable earnings and strong capitalization at least in the “AA” range over the next two to three years.

Following its regular annual rating review, the rating agency S&P affirmed the “A” rating on Sava Re d.d. and Zavarovalnica Sava d.d. The outlook is stable.

In the rating agency’s assessment, the key strengths of the Sava Insurance Group are its established and stable position in the Slovenian market, solid capitalization at the “AAA” level and its conservative investment policy. One of the Group’s strengths is also prudent underwriting combined with conservative reinsurance protection, which supports operating performance.

The Agency is of the opinion that the Sava Insurance Group solidified its market position in the Slovenian insurance market with the successful consolidation of Vita. The Agency believes the Group will continue to leverage its extensive distribution capabilities and client-centric approach to tap profitable growth from the favorable market conditions in Slovenia. The Agency also believes that the Group’s good underwriting profitability will safeguard its stability, even as claims frequency normalizes following a slowdown during COVID-19 lockdowns.

The stable outlook on the Group’s core operating entities reflects the Agency’s expectation that the Group’s management will continue to implement its strategy of profitable growth while further diversifying premiums and income streams. Despite the integration of Vita and the potential turn in the economic cycle, the Agency expects the Group to sustain a strong balance sheet with at least very strong capitalization and strong and stable earnings over the next two years, enabling the Group to continue developing its domestic and foreign operations.