Another trading day pushed Croatian and Slovenian main equity indexes further in red, so they ended the day down 7.05% and 4.72%, respectively.

CROATIA

After recording the highest daily decline this year and one of the highest daily decreases in its history on Thursday (-10.18%), on Friday ZSE’s main index bounced back, recording a sharp daily increase of 5.78%. However, CROBEX witnessed another significant decrease of 7.05% yesterday.

Ending the day at 1,405.52 points, CROBEX recorded a change of -30.3% YTD. Note that the last time CROBEX observed such value was in 2009.

Out of 53 stock traded on ZSE yesterday, 44 ended the day in red. The total traded volume in equities was HRK 45.9m, out of which 47% was traded as block transactions (HRK 21.7m). The largest block traded was that of Valamar in the amount of HRK 17.2m, and tranasaction was realized at HRK 21.50 per share, at which price it also closed the trading day. Note that such a price puts Valamar at P/E of 9.5x and EV/EBITDA of 7.3x. Of the CROBEX constituents, the most substantial daily decrease was recorded by Atlantska Plovidba share, 19.57%, and Maistra share, 17.74%, while at the same time Đuro Đakovic share rose by 8.86%.

Of the index heavy weights, HT, as well as FMCG companies such as Atlantic Grupa and Podravka saw a decrease of 4.9%, 7.14% and 11.53%, respectively

Share Price Performance of CROBEX Constituents (16.3.2020) (%)

SLOVENIA

After witnessing a slight increase Friday (SBITOP +1%), the Slovenian equity market observed another rough day. The main index of LJSE recorded a sharp daily decrease of 4.72%, ending the day at 725.41 points. 

The last time we observed the index at the current value was in January of 2017. Meanwhile, the index recorded a 21.7% decrease YTD.  

When observing the constituents of the SBITOP, most of them ended the day in red. NLB recorded the highest daily share priced decrease of 8.28%, ending the day at EUR 42.1 per share. At the current share price, NLB witnessed a 32.1% YTD decrease and is currently traded 18.3% lower compared to the public offering price.  

Of the index heavy weights, Krka recorded a 2.32% decrease, while Petrol recorded a 4.15% decrease.  

Share Price Performance of SBITOP Constituents (16.3.2020) (%)

For today, we decided to bring you an updated overview of the indebtedness and capital structure of CROBEX components. 

For today, we decided to present you with a comparison of CROBEX components. To be specific, we observed how indebted CROBEX companies are by comparing net debt to EBITDA (2019 results) and % of debt financing. We also added how much additional debt these companies could take in order to reach 3xEBITDA. 

Note that Adris Grupa and ZABA were excluded from the overview as Adris operates as a holding, while ZABA is a bank. Besides that, Đuro Đaković was also excluded as they operate with a negative EBITDA. 

Net Debt/ EBITDA

Among observed companies Končar, HT and Ericsson Nikola Tesla operate at a negative net debt, meaning their cash position (short term financial assets + cash and cash equivalents) exceed their financial debt.  

Of the other constituents, Dalekovod has by far the highest indebtedness of 11.06xEBITDA. Next comes Atlantska Plovidba with a net debt/ EBITDA of 3.66. Valamar Riviera follows with a net debt/EBITDA of 2.84, while  all other constituents are operating with an indebtedness lower than 3xEBITDA. 

We also observed how much additional debt companies could take to reach 3xEBITDA which is in the region considered as a breaking point and red flag in terms of indebtedness. 

This analysis provides information on the companies’ potentials for takeovers, but also the potential for an internal growth through additional borrowing. It’s important to point out that companies with net debt above 3xEBITDA are not necessarily too indebted as not all them are equal and their industries differ (and the other way around – certain industries are not prone to hold any leverage). 

Potential Additional Debt (HRK m) to Reach 3x EBITDA 

Turning our attention to the capital structure, of the observed companies, 9 of them are mostly equity funded. Of those, HT leads the list with 97.2% equity, followed with Končar 88.5%. On the flip side, Optima Telekom and Dalekovod are almost entirely debt funded with 96.3% and 83.2%, respectively. 

Capital Structure of CROBEX Components 

Limitations regarding everyday trading (volume and price) have been removed from the existing program. 

HT published a document on the Zagreb Stock Exchange announcing that they have amended the provisions of their share buyback program. To be specific, limitations regarding everyday trading (volume and price) have been removed from the existing program, except for the limitation that is determined by General Assembly decision under which the highest price of purchase must not exceed 10%, nor be lower than 10% compared to the average trading price for the share achieved the previous trading day.  

The company notes that they plan to continue withdrawing acquired company shares without decreasing share capital of the company, thereby increasing the participation of the remaining shares in the share capital. This will generate benefits for all HT shareholders which are arising from the foregoing additional return of funds to shareholders, besides the regular dividend, and from improvement of the capital structure of the company. 

The buyback was concluded at RON 1.39 per share and the USD equivalent of RON 69.50 per GDR. Note that such a price represents a 15.8% premium compared to the Friday’s closing price. 

Fondul Proprietatea published a document on the Bucharest Stock Exchange announcing that they have completed an accelerated buyback program on Friday (13 March). In total Fondul repurchased 200m shares (124.48m in the form of shares and 75.52m in the form of GDRs).  

The mentioned buyback was concluded at RON 1.39 per share and the USD equivalent of RON 69.50 per GDR. Note that such a price represents a 15.8% premium compared to the Friday’s closing price.