Today, we bring you our updated overview of the indebtedness and capital structure of Slovenian companies which comprise the SBITOP index using the FY 2021 results. 

As all the companies which are part of the SBITOP index have published their 2021 results, we decided to take a look into how indebted these companies are by comparing net debt to EBITDA. 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 7x, while they have a cash-adjusted P/E* of 5.16x. At the same time, Krka has a P/E* of 9x, whilst they have a cash-adjusted P/E* of 8.49x. 

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 2.13x. It should also be noted that Petrol achieved an EBITDA growth of 42.9% YoY whilst increasing its net debt by 54.37% YoY, mostly due to the latest acquisition of Crodux. Telekom Slovenije has a net debt/EBITDA ratio of 2.03x. 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 4.4% YoY, but this ratio still suffered since the company increased its debt by 19%. 

Lastly, we have Luka Koper with a net debt to EBITDA of 0.90x. 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 55.05m, representing a 158% growth YoY. During the same time, the company’s EBITDA remained almost the same, which means that if we were to compare net debt/EBITDA 2020 vs. 2021, it grew by 160% YoY (from 0.35x to 0.90x). 

Net Debt/EBITDA

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 99.9% equity, followed by Krka with 99.3%, Luka Koper with 86.5%, Petrol and Telekom Slovenije with 59.9% and 55.8%, respectively. 

Capital Structure of Select SBITOP Companies

The legislative bill to simplify taxation on the capital market, namely reducing the rates of capital gains tax, has received final approval from the Romanian Parliament.

Last week, the Romanian Parliament has adopted the legislative proposal to simplify the taxation of investors in the capital market. The bill provides for withholding tax on capital gains for individual investors to be retained at source, with two tax levels. The first level refers to the 1% tax on the holdings over one year, while the 2nd level refers to a 3% tax on holdings held for less than one year, while losses won’t be compensated.

The obligation to calculate, withhold at source, declare and pay the tax will fall on the intermediaries and fund managers. The law would enter into force on 1 January 2023. This change marks further development and growth for the Romanian capital market, which will surely attract more investments after this news.

As a point of comparison, in Croatia, the capital gains tax is 10% for all holdings held for less than 2 years (recently changed from 12%) and drops to 0% after 2 years of holding the investments. At the same time, on the 10% tax, there is an additional surtax depending on where you live. For example, if you live in Zagreb which has an 18% surtax, the total tax you would have to pay if you held any of your investments for less than 2 years would amount to 11.8%.

As of March 2022, Fondul’s NAV reached RON 14.54bn, which would translate into a NAV per share of RON 2.3466, an increase of 29.2% YoY.

According to the latest Fondul Proprietatea’s NAV report (31 March 2022), Fondul reported a total NAV of RON 14.54bn (EUR 2.91bn), which translates into a NAV per share of RON 2.3466 (EUR 0.4693).

Comparing it on a YoY basis, the total NAV recorded an increase of 34%, while NAV per share grew by 29.2%.

Fondul Proprietatea’s portfolio structure still remains focused on the power utilities generation sector (68.3% of NAV) and oil and gas sector (9.1% of NAV). This is also why the two biggest holdings, Hidroelectrica and OMV Petrom amount to 73.8% of the total NAV of the Fund. In terms of the Fund’s portfolio structure, unlisted equities accounted for the vast majority of NAV, standing at 85.55%, an increase of 11.88 p.p. YoY. Following them, we have listed equities with 6.63%, a decrease of -11.57 p.p., and bank deposits, which account for 4.38% of the NAV.

Turning our attention towards the share price’s performance, during the month, the Company’s share price grew by 7.3%, ending the month at RON 2.11 per share. The current discount to NAV per share stands at 10.1%.

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

Given the current Covid-19 situation, some of these events might be subject to change (postponed or cancelled).