Today, we bring you our updated overview of the indebtedness and capital structure of Slovenian companies that comprise the SBITOP index using the H1 2023 results. It should be noted that we excluded NLB Banka, Triglav, and Sava Re from this comparison due to the nature of their business operations.
At the same time, Cinkarna Celje and Krka operate at a negative net debt, meaning their cash position (short-term financial assets + cash and cash equivalents) exceeds their financial debt. Because of this reason, they were excluded from the net debt/EBITDA graph. Of the remaining Slovenian blue chips, Petrol has the highest net debt/EBITDA ratio of 3.1x. It should also be noted that Petrol is currently under a lot of persisting pressures regarding its margins and financial position due to government regulation of petrol, electricity and gas prices. However, Petrol showed recovery looking at this ratio due to an improvement in EBITDA. If we were to look at EV/EBITDA on a Q1 basis, the ratio would amount to 5.4x (taking TTM results). Looking at this ratio, we can clearly see signs of stabilization. Further, Telekom Slovenije has a net debt/EBITDA ratio of 1.8x. Considering that Telekom Slovenije operates in the telecommunications industry, where investments into new infrastructure (and thus the need for a lot of cash to finance these projects) are taken in the form of debt, the Company’s net debt is at a higher level in comparison to their EBITDA. Finally, Luka Koper showed a positive net debt level in H1 results (which was not the case with Q1 results). However, we must note that net debt is barely positive and therefore, the company’s net debt/EBITDA amounted to 0.3x, lowest among the all observed companies.
Net Debt/EBITDA
Source: LJSE, InterCapital Research
We looked at how much additional debt the companies could take in order to reach 3x EBITDA, which in the region is considered a breaking point and a red flag in terms of indebtedness. Further, we note that Petrol’s deviation obviously comes from much lower TTM results due to government regulation. The situation should stabilize and improve in the upcoming period. Therefore, Petrol “broke” the red flat limit. However, from a valuation perspective, one can conclude that the market expects recovery/growth in Petrol’s profitability, taking the Group’s P/E ratio of 15.2x.
Potential Additional Debt (EUR m) to reach 3x EBITDA
Source: LJSE, InterCapital Research
We also took a look at the capital structure of the observed companies. Cinkarna Celje leads the way with virtually 100% equity, followed by Krka with 99.5%, Luka Koper with 81.7%, Petrol with 62.6% and Telekom Slovenije with 60.1% of equity in its structure of financing. Taking only the latest quarter into account, no major changes occurred in the capital structure of Slovenian blue chips.
Capital Structure of Select SBITOP Companies
Source: LJSE, InterCapital Research
In the 9 months since the beginning of 2023, the total equity turnover, excl. blocks amounted to EUR 220m in Slovenia, while the average daily turnover amounted to EUR 1.1m. Meanwhile, the most traded stocks, Krka, NLB, and Triglav, accounted for 68% of the total equity turnover, on average.
In today’s analysis, we looked at the equity turnover development on the Ljubljana Stock Exchange. We’ll analyze the overall turnover, average daily turnover, as well as the most traded stocks during 2023.
Equity turnover by months on LJSE (January 2023 – September 2023, EURm)
Source: LJSE, InterCapital Research
As we can see in the graph above, the equity block turnover has been somewhat low this year, accounting for app. 7% of the total equity turnover in 2023 and some months even recording 0 transactions. As such, the majority of the transactions happened on the exchange, with an average daily turnover of app. EUR 1.1m. During the period, the total working days amounted to 188, while the monthly average amounted to 21 days.
Average daily turnover each month on the LJSE (January 2023 – September 2023, EURm)
Source: LJSE, InterCapital Research
Delving deeper into this, the average daily turnover started quite slowly in 2023 but picked up pace in the middle of the year, and reached a peak of EUR 1.67m in August 2023. This was to be expected, as the end of July, and August recorded storms and floodings in Slovenia, which had a direct and indirect impact on many of the listed companies. Moving on to the most traded stocks, Krka recorded by far the largest turnover, at EUR 82.9m, or 38% of the total equity turnover. Following them there is NLB at EUR 49.8m, or 23%, and Triglav, at EUR 15.9m, or 7% of the total.
Top 3 most traded stocks by months (January 2023 – September 2023, EURm)
| wdt_ID | Ticker | Most traded stock | 2nd most traded stock | 3rd most traded stock |
|---|---|---|---|---|
| 1 | Jan-23 | NLB | Krka | Cinkarna Celje |
| 2 | Feb-23 | Krka | NLB | Triglav |
| 3 | Mar-23 | Krka | NLB | Triglav |
| 4 | Apr-23 | Krka | NLB | Cinkarna Celje |
| 5 | May-23 | Krka | NLB | Triglav |
| 6 | Jun-23 | Krka | NLB | Triglav |
| 7 | Jul-23 | Krka | NLB | Luka Koper |
| 8 | Aug-23 | Krka | Triglav | NLB |
| 9 | Sep-23 | Krka | NLB | Triglav |
Source: LJSE, InterCapital Research
Of course, it has to be noted that, unlike the Zagreb Stock Exchange where there are many different companies listed, the number of companies listed in Slovenia is rather small. As such, the turnover is more concentrated in the most well-known and liquid stocks. Besides the amount traded, it is also prudent to look at the times when these stocks were the most traded. Krka again takes the cake here, being the most traded stock for 8 out of 9 months observed. Following them is of course NLB, which was the most traded stock in January, the 2nd most traded stock in 7 other months, and the 3rd most traded stock during one month. Moving on, we have Triglav, which had 1 month when it was the 2nd most traded stock and 5 months when it was the 3rd most traded stock. Cinkarna Celje and Luka Koper also held spots as the 3rd most traded stock, Cinkarna for 2 months and Luka Koper for 1 month, respectively.
Performance of Slovenian blue chip companies (9M 2023, 2023 YTD, %)
Source: Bloomberg, InterCapital Research
In terms of how this reflected on performance, Luka Koper recorded a 26% return in 9M 2023 and a 25% return in 2023 YTD. Following them are Krka and NLB, both at 19% return in 9M 2023, but on a YTD basis, NLB still managed to achieve a 19% return, while Krka’s return was reduced to 17%. On the other hand, Triglav recorded a 12% decline in share price on a 9M 2023 basis and a 14% decline on a YTD basis. As we can see here, other factors can influence the returns of the stocks, but as a general rule, the most traded stocks usually over time end up either one of the best or worst performers, depending on the macroeconomic environment, the company itself, and a myriad of other variables.