Today, we are bringing you a brief analysis of the cash per share of the Croatian blue chip companies, based on the FY 2022 results.

With the FY 2022 publishing season officially over (at least for the Croatian companies), we decided to bring you an analysis of some of the largest Croatian blue chips’ cash per share, as well as their current cash position. This analysis can be helpful, especially in times of the economic downturn, which arguably is affecting all companies now. This is because it will allow us to see the balance sheet’s strength and overall liquidity of these companies.

The cash per share metric used here measures how much cash any of these companies have on hand, on a per share (outstanding) basis. It is calculated by summing the company’s total cash in its balance sheet, and the short-term investments that can easily be turned into cash. This metric is useful for showing us a company’s ability to return money to its shareholders, through dividends, share buybacks, or their ability to use the money they have to pay off debts.

Cash per share of Croatian blue chip companies (FY 2022, EUR)

Source: Companies’ data, InterCapital Research

Several things should be noted here. First of all, looking solely at the cash per share of a company can give a misleading view of its financial strength, with no debt being taken into account with the figure. As such, looking at the company’s indebtedness should also be considered, which we wrote about this week. To learn more about this, click here.

A high level of cash per share indicates the solid performance of the company, as well as giving some reinsurance that the company will be able to cope with any unexpected difficulties. Also, this metric as a number itself is not telling the whole story, as some companies might have more cash but also more shares outstanding, diluting the number. It should be noted that the changes to cash per share are not solely based on the changes in the companies’ available cash and cash equivalents, but also on the changing nature of the number of shares outstanding, due to share buyback programs or share splits as we witnessed with Atlantic Grupa during 2022 (4-to-1 share split). As such, looking at the cash per share as a percentage of the current share price gives a better overview.

Cash per share as a percentage of the current share price (%)

Source: Companies’ data, InterCapital Research

As can be seen from the graph, the company with the highest cash per share as a % of their current share price is Adris, with 49.1%, followed by Arena Hospitality Group at 39.3%, Atlantska Plodvidba at 28.5%, Ericsson NT at 23.9%, Valamar Riviera with 19.3% and HT, with 17.7%. Again, a higher cash per share in terms of the current share price should not come as a surprise for hospitality companies due to the nature of the industry.

A similar situation is with other asset-heavy companies like Atlantska Plovidba and Končar. On the other hand, AD Plastik has the lowest cash per share as a percentage of the current share price, of 6.9%. This should not come as a surprise due to a very bad year for the Company as both the Russian invasion and semiconductor shortage impacted its operations in Russia & EU. AD Plastik is preceded by Atlantic Grupa with 9.4% of cash as % of its current share price. Lastly, we look at the cash position of these companies. This includes both cash as well as short-term financial assets.

Cash position of Croatian blue chips (FY 2022, EURm)

Source: Companies’ data, InterCapital Research

Finally, looking at the cash itself, the largest amount held is by Adris, at EUR 429.9m, an increase of 20.3% YoY. HT is following closely with a cash position of EUR 386.9m (+1.5% YoY). Following them, we have Valamar Riviera at EUR 107.2m, a decrease of 27.6% YoY, Ericsson NT at EUR 74.8m, an increase of 10.4% YoY and Arena at EUR 70.4m. Finally, we note the investments and working capital requirements constantly change in value. The increase or a decline in asset value (such as with investments into securities), can also influence these changes.

Yesterday, Luka Rijeka’s share price surged by 4.35%, after the Company announced that it received information from a foreign Company on their intention to publish a voluntary takeover bid for its shares.

The Company in question is called Zentralschweizerische Investment Holding AG (Central Swiss Investment Holding Ltd.), a Swiss Holding Company. According to the published document, this Company’s business operations include offering services in holding and advisory segments, including functions such as acquiring, holding, and managing investments. Even though some of the more important details are yet to be announced (such as the takeover bid price), there are some interesting tidbits that can be seen in the published document.

Firstly, the Takeover Company currently owns no shares in Luka Rijeka, and they stated that their intention is to gather at least 51% of the share in the Company. If we looked at the current shareholder structure of Luka Rijeka, the largest shareholder is effectively the Croatian Government through CERP (Center for Restructuring and Sale), at 25.02%, followed by OT Logistics, a Polish Company which also attempted to takeover Luka Rijeka back in 2017, and are currently holding 24.98%. After them, we have a mix of custody accounts, as well as institutional investors in the form of pension funds. After the announcement of the news, Luka Rijeka’s share price surged by 4.35%.

If it is to be believed that the takeover Company is willing to acquire at least 51%, the premium that they would have to pay would have to be quite high, but currently, it would only be speculation to say what it would be exactly. More developments will follow as more details start to be known, the first of which will be the announcement by the regulator (HANFA) of the approval of the voluntary takeover bid.

Luka Rijeka share price (2015 – 2023 YTD, EUR)

Source: Bloomberg, InterCapital Research