Yesterday, the main indices of both Croatian and Slovenian stock market recorded a sharp decrease of 4.91% and 3.76%, respectively.
Yesterday, the Croatian and Slovenian stock market observed a sharp decrease, which could be seen when observing the performance of main stock exchange indices. CROBEX recorded a decrease of 4.91%, closing at 1,922.4 points, with all constituents ending the day in red. Note that the last time the index observed such a sharp daily decrease was in August of 2011, when CROBEX observed a change of -4.6%. Meanwhile, a higher decrease than the one observed yesterday was witnessed in June of 2009, when the index recorded a decrease of 6.78%.
It is also worth noting that yesterday 54 out of 63 traded stocks ended the day in red.
Of the CROBEX constituents, Ericsson NT witnessed the highest decrease of 8.59%, followed by Optima Telekom with a 8.57% decrease.
As a result of the sell-off, ZSE observed an extremely high turnover of HRK 54m (or EUR 7.2m), which is roughly 5 times higher compared to the average daily turnover of 2019.
Share Price Performance of CROBEX Constituents (24.2.2020) (%)
When observing the main index of the Slovenian Stock Exchange, SBITOP, one can notice a decrease of 3.76%, with the index closing at 942.73 points, with all constituents ending the day in red as well. Note that the last time the index recorded a higher daily decrease was in August of 2015, when the index recorded a change of -4.7%.
Of the SBITOP constituents, Unior recorded the highest decrease of 6%. Of the index heavy weights, Krka observed a decrease of 4.4%, while Petrol recorded a decrease of 4.9%.
Share Price Performance of SBITOP Constituents (24.2.2020) (%)
Comparing to last week it appears that markets in general have started to give a heavier weight to potential risks relating to Coronavirus. When observing our region, we believe that such a market reaction is even more pronounced due to the fact that virus outbreak hit northern Italy – which not only is a strong trading partner but is also geographically in proximity to both Slovenia and Croatia. Besides that, the local market seems to have witnessed a spillover of the global markets, which also ended the yesterday’s trading day in red. Although it is still uncertain on whether the above stated news will affect the FY 2020 results, further escalation in relation to the virus could certainly skew the previously established outlooks.
In the graph below you can see the yesterday’s performance of global indices.
According to media, NLB Acquired the 83.23% stake in Komercijalna Banka for EUR 450m.
According to media, NLB Group has acquired the state owned stake of 83.23% in Komercijalna Banka. The local media has covered that NLB has acquired the 83.23% stake for EUR 450m, which has not yet been officially confirmed. To put things into a perspective, this puts the transaction multiple at a P/B of 0.88.
However it is important to state that the media has once before stated the same pricing, while NLB has refuted such a price. Therefore, there is a real possibility that the mentioned price overstated.
We will keep you posted as soon as new information arise.
To read more about the privatization of Komercijalna Banka click here.
Croatian shipping company Tankerska Next Generation published their FY 2019 results, showing a 10% YoY top line decrease. Meanwhile EBITDA went up 25%, while net profit soared to HRK 23m (+271%).
According to the report, daily TCE net rates per operating vessel in 2019 were USD 14,794 on average, representing an increase of 12.1% YoY. Meanwhile fleet utilization remained a 100%. The rise in TCEs was caused by improved market conditions witnessed in 2019.
The company’s strategic concept continued to focus on the efforts to secure a strong employment balance between spot and time charters, however with a stronger emphasis on the latter. As a result, at the end of 2019 TNG has four vessels charted out through time charters, while two remain available to charter out on the spot market. The vessels currently employed through time charters are: Velebit (USD 14,500 per day until Q2 2020), Dalmacija (USD 16,000 per day until Q2 2020), Vukovar (USD 17,000 per day) and Pag (USD 17,150 per day).
A breakdown of TNG’s charter activities in 2019 would go like this: TNG secured a 12-month time charter employment for one of the ECO class product tankers in March at USD 16,000 after which a one year employment for the conventional ice class product tanker MT Velebit, at USD 14,500 per day was concluded, leading to yet an additional eight months at approximately USD 15,500 per day in due course. In May, TNG secured an additional minimum 6 month time charter employment for one of the ECO class product tankers at USD 17,000 per day while yet another deal was concluded that same month for minimum 6 months for another one of their ECO class product tankers with charterers’ option to extend for up to 12 months chartered out to a leading U.S. charterer at approximately USD 17,100 per day.
EBITDA amounted to HRK 110.4m, which represents a 25.6% YoY increase. The increase came as a result of lower operating expenses which amounted to HRK 158.2m and were lower 25.4% than in the same period in 2018. This decrease was due to a change in the employment strategy of Vukovar, Velebit, Pag and Dalmacija which by operating on time charter contract have lower voyage associated costs e.g. port costs, bunker, which is accountable to the charterer.
Below the operating line, the net financial result deteriorated slightly, amounting to HRK -29.7m. This represents a widening of the loss by 13% YoY. Finally, net profit amounted to HRK 23.3m, representing an increase of 271% YoY.
Turning our attention to the balance sheet, TNG decrease their indebtedness by HRK 86.8m thus lowering their net debt to HRK 493.8m or 4.5x net debt/EBITDA. According to the Management, the decrease of debt is in accordance with the loan repayment plans of TNG and regular decrease in indebtedness, while a further decrease in the company’s debt is expected in the future.
The management provided a calculation of NAV per share, putting it at USD 10.69 (cca HRK 73.6). This would indicate that TNG is currently traded 73.5% below the NAV of their vessels. However, they highlighted that the assessment was based on current market conditions (revenue and cost assumptions of typical average product tanker) which show strong fluctuations and do not take into account TNG specifics and management expectations.
Initiation of a Buy-back program
TNG also announced an initiation of a share buyback program through which the company plans to repurchase up to 110,000 of own shares, representing 1.3% of the share capital. The aggregate purchase price of all shares acquired under the program will be no greater than HRK 5m. The repurchase price per share, will be at least 90% and up to 110% of the average market price for a share achieved during the previous trading day. Note that the Program started yesterday (24 February) and will last until 24 February 2021. As of the announcement date, the Company holds 13,200 of ordinary shares in treasury that represent 0.15% of the share capital.
In 2019, Alro recorded a decrease in sales of 7%, a decrease in EBIT of 73% and a net loss of RON -68.3m.
Alro published their preliminary FY 2019 results according to which the company recorded a 7% decrease in revenue, amounting to RON 2.78bn.
The company notes that at a global scale, the aluminium market was affected in 2019 by a 15% YoY LME decrease, by international politics, such as the US tariffs on imports, the Chinese retaliation, the Brexit negotiations. All these event drove the clients on the aluminium market to have a cautious behavior, which had a significant impact on Alro’s results in 2019.
The tariffs imposed by the USA caused important aluminium metal quantities to be diverted between key market areas. At the same time, the lifting of US sanctions against Rusal in the beginning of 2019 brought back more aluminium into the market.
All these contributed to fluctuations in the aluminium markets worldwide and determined clients downstream to rather wait for better opportunities, which eventually caused the prices to decrease.
Alro also states that on the Romanian market they faced further adverse conditions, mainly derived from the prohibitive energy prices, which are above the prices in other European countries such as Germany, Austria, Poland, France, the Netherlands, and above the European Union average, and consequently pushing Alro’s gross margin as low as 8%, from last year’s 22%. This trend was also observable in Q4 2019 when the gross margin was 4% compared to the 19% recorded in Q4 2018.
When observing cost of goods sold, the Group reported an increase of 10%, amounting to RON 2.55bn. Such an increase came mainly on the back of the growth of the purchase prices of utilities (electricity and gas), in line with the prices from OPCOM’s platforms.
As a result of all of the above, gross profit stood at RON 226.4m, compared to RON 669.88m in 2018.
Going further down the P&L, SG&A were lower by 10%, while other operating income went up by RON 156.4m. This was achieved as the company reduced the amperage and energy consumption in the smelter and resold the spare electricity back to the market by limiting production of electrolytic and primary aluminium to only as much as necessary for assuring the sales target and the production of processed products; it reduced the level of inventories of raw materials and consumables and it effectively diminished its general and administrative expenses.
As a result, EBIT amounted to RON 99.22m, representing a decrease of 73%. Such a result puts the operating profit margin at 3.6%, showing a significant decrease of 8.6 p.p.
In 2019, Alro recorded a net loss of RON 68.34m, compared to a net profit of RON 235.3m in 2018.
In 2019, Sphera recoreded an increase in sales of 23.8% YoY, an increase in EBITDA of 196% and an increase in net profit of 128.6%.
As Sphera Franchise Group published their preliminary FY 2019 results, we are brining you key takes from it. According to the report, the company’s sales reached RON 954.7m, representing an increase of 23.8% YoY. The main drivers of such an increase were the growth in the sales of USFN Romania (KFC restaurants) (+15.9%), which had a contribution of 12.1 p.p. in the sales growth rate, and USFN Italy (KFC restaurants in Italy), whose sales advanced 155% and contributed 7.8 p.p. to the sales growth rate.
When observing operating expenses, they reached RON 828.3m, representing an increase of 24.0% YoY. The higher operating expenses could be mainly attributed to the higher payroll and employee benefits (+33.3% or RON 53.9m) and higher depreciation (+252% or RON 51.5m). Excluding the impact of IFRS 16, operating expenses amounted to RON 830.4m, representing an increase of 24.3% YoY.
As a result of the above, EBITDA went up by 196%, amounting to RON 152.6m. This puts the EBITDA margin at 16%, showing an improvement of 9.3 p.p, mainly as a result of the impact of IFRS 16 on restaurant operating margin. Excluding the impact of IFRS 16, normalized EBITDA increased 32.7%, amounting to RON 96m. This puts the EBITDA margin at 10.1% (+0.07 p.p.).
Going furhter down the P&L, operating profit amounted to RON 76.4m, representing an increase of 154% YoY. In 2019, Sphera recorded a further decrease of the net financial result, which amounted to RON -17.4m (compared to RON -2.9m).
In 2019, Sphera recoreded a net profit of RON 55.46m (+128.6% YoY), which puts the profit margin at 5.8% (+2.7 p.p. YoY).