IC Market Espresso 21 Jul 2022

Indebtedness and Cash Position of SBITOP Companies – Q1 2022

Today, we bring you our updated overview of the indebtedness and capital structure of Slovenian companies which comprise the SBITOP index using the Q1 2022 results. It should be noted that we excluded NLB Banka, Triglav, and Sava Re from this comparison. 

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. To make up for this, we decided to show the differences in P/E and cash-adjusted P/E of these two companies. When comparing these two numbers in these companies, we can see that Cinkarna Celje has a P/E* of 5.3x, while they have a cash-adjusted P/E* of 3.8x. At the same time, Krka has a P/E* of 9.4x, whilst they have a cash-adjusted P/E* of 8.7x. 

P/E and Cash-adjusted P/E

Out of the remaining companies (Petrol, Telekom Slovenije, and Luka Koper), Petrol has the highest net debt/EBITDA ratio of 2.2x. It should also be noted that Petrol achieved an EBITDA growth of 21.5% YoY whilst increasing its net debt by 59% YoY, mostly due to the latest acquisition of Crodux. 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. The company increased its EBITDA by 1.8% YoY, but this ratio still did not report improvement since the company increased its net debt by 1.4%. 

Lastly, we have Luka Koper with a net debt to EBITDA of 0.3x. When considering the industry (shipping and port services) Luka Koper operates in, it comes as no surprise the need for cash to finance further port infrastructure investments. Even if this is not evident from the lower net debt/EBITDA, the Company currently has a net debt of EUR 71.2m, representing a decrease of 11.3 YoY. During the same time, the company’s EBITDA increased 60.6% YoY, resulting in improvement of net debt/EBITDA indicator. 


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.

Potential Additional Debt (EUR m) to reach 3x EBITDA

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 99.2%, Luka Koper with 87%, Petrol and Telekom Slovenije both with 59.5% equity.

Capital Structure of Select SBITOP Companies

S&P Rating Services Places Petrol’s Rating on CreditWatch Negative

Standard & Poor’s Rating Services put Petrol’s rating on CreditWatch Negative due to the negative intervention in the motor fuel market. The agency put Petrol’s long-term rating of BBB- and short-term rating of A-3 on CreditWatch Negative. Also, the agency estimates that the financial risk of Petrol has not deteriorated.

Standard & Poor’s Rating Services placed Petrol’s rating on CreditWatch Negative due to the negative intervention in the motor fuel market. Standard & Poor’s placed Petrol’s long-term rating of BBB- and short-term rating of A-3 on CreditWatch Negative. The new rating should reflect the consequences of the negative intervention on the motor fuel market where sellers were forced to sell motor fuels even below the cost as a result of direct price regulation. Furthermore, the rating should reflect uncertainty regarding compensation for the loss incurred and risks related to potential additional interventions in the energy market.

Being placed on CreditWatch Negative could result in Petrol’s rating being downgraded by one level from the current BBB- to BB+ in the upcoming months. This should occur if the situation in Petrol’s business environment further escalates as a result of the energy price regulation and if Petrol is not compensated by the Republic of Slovenia for the loss incurred due to the intervention on the motor fuel market within a reasonable period of time. Also, Standard & Poor’s Rating services estimates that the financial risk of Petrol has not deteriorated given the current situation.

We emphasize Petrol will publish its guidance for 2022. along with the Company’s H1 results in August.

Slovenian Mutual Funds Asset Structure – June 2022

By the end of June 2022, the total AUM (Assets Under Management) of Slovenian mutual funds equaled EUR 3.89bn, which is a decrease of 4.5% MoM, 10.4% YTD, and only a tiny increase of 0.1% YoY.

The Slovenian Securities Market Agency has published its report on the changes recorded by the Slovenian mutual funds in June 2022. According to it, at the end of the month, the Slovenian mutual funds had a total of EUR 3.89bn of AUM, representing a noteworthy decrease of 4.5% MoM, and a 10.4% YTD. Considering the current situation in Europe with rising inflation rates, the geopolitical situation in Ukraine and the expected increases of interest rates by the ECB, the AUM decreased both as a result of the loss of value of investments, as well as the lower net contributions into the funds, in fact, the lowest net contributions since November 2020.

Equity holdings of Slovenian UCITS funds (EURm)

This decline continues the negative trend we have witnessed in the global capital markets (but especially in America and Europe). Looking at the changes experienced by domestic and foreign equity holdings, we can see that this trend is present in both cases. In June 2022, domestic equity holdings amounted to EUR 61.1m, a decrease of 4.8% MoM, and 4% YoY. Foreign equity, which accounts for the vast majority of equity holdings at 97.7%, decreased by 4.9% MoM, and 1.6% YoY.

Taking a look at the asset structure of the funds, in May, shares accounted for 68.9% (or EUR 2.68bn) of the total holdings, representing a decrease of 0.3% p.p. MoM, and 1.3% p.p. YoY. Next up, we have bond holdings, which at EUR 636.3m account for 16.4% of the total holdings, while at the same time, representing an increase of 0.5 p.p. MoM, 0.6 p.p. YoY. The 3rd largest category by assets, money market, deposits, and cash, at 8.1% (or EUR 312.9m) of the total, experienced the largest increase in both MoM and YoY, at 0.6 p.p. and 2.2. p.p., respectively. Finally, investment funds, which at EUR 238.4m account for 6.1% of the total, decrease by 0.6 p,p. MoM, and 1.6 p.p. YoY.

Total assets of Slovenian mutual funds (EURbn)

Again, we can see a clear trend in the data here, which shows us that riskier types of assets like shares, and investment funds (which again, hold shares in their portfolio), are losing their total AUM, while “safer” options, like bond investments and cash itself (the most liquid form of assets), are being favored. As we already mentioned, the decline in AUM is not the only thing affecting the mutual funds, as there has been a strong drop in net contributions, with them amounting to only EUR 4.97m during the month, which itself also contributed to the decline on the TTM (trailing twelve months) basis. If we looked at this data, in the last twelve months, the total net contributions amounted to EUR 332.9m, a decrease of 3.5% compared to the same period a year earlier. However, it should be noted that there are some positive news for the mutual funds, as they have increased the total number of subscribers to 502,521, an increase of 4.2% YoY.

Net contributions in Slovenian mutual funds (EURm)

Upcoming Events – July 2022

Here you can find the dates for the upcoming events of the regional companies.

wdt_ID Date Ticker Announcement Country
10 22.7.2022 ERNT Ericsson NT Q2 2022 Results Croatia
11 22.7.2022 PODR Podravka Q2 2022 Results Croatia
12 25.7.2022 TRP Teraplast Q2 2022 Results Romania
13 25.7.2022 ATPL Atlantska Plovidba Audit Committee Meeting Croatia
14 26.7.2022 TRP Teraplast Q2 2022 Results Conference call Romania
15 26.7.2022 ATPL Atlantska Plovidba Board of Directors Meeting Croatia
16 27.7.2022 ADPL AD Plastik Q2 2022 Results Croatia
17 27.7.2022 ARNT Arena Hospitality Group Supervisory Board Meeting Croatia
18 28.7.2022 KOEI Končar Q2 2022 Results Croatia
19 28.7.2022 HT HT Q2 2022 Results, Investor & Analyst Conference Call Croatia
20 28.7.2022 ATGR Atlantic Grupa Q2 2022 Results Croatia
21 28.7.2022 SNP OMV Petrom Q2 2022 Results Romania
22 28.7.2022 SNP OMV Petrom conference Call - Q2 2022 Results Romania
23 28.7.2022 ARNT Arena Hospitality Group Q2 2022 Results Croatia
24 28.7.2022 DIGI Digi update of the 2021 Annual report Romania
25 29.7.2022 TLSG Telekom Slovenije Ex-dividend date Slovenia
26 29.7.2022 ATPL Atlantska Plovidba Q2 2022 Results Croatia
27 29.7.2022 RIVP Valamar Riviera Q2 2022 Results Croatia

Due to the nature of these events, they are subject to change (might be postponed or canceled).