IC Market Espresso 28 Jun 2019

Valamar Held Investors Day and Announced Investments for 2020
Valamar held investors day yesterday where it presented 2018 major events, 2019 investments in repositioned and now opened hotel and resorts and camping resorts, and announced HRK 599m of investments for 2020

Valamar today held Investors Day in Poreč where it presented business year 2018 and major events that have marked it. In 2019 Valamar has continued to invest in the repositioning of the portfolio towards products and services with higher added value. Total investments have amounted to HRK 793m, while most of it is pertaining to Istra Premium Camping Resort and Valamar Collection Marea Suites, both premium capacities. Management sees that the demand for premium and upscale capacities on Mediterranean exists and that it will continue growing in the following period. The business environment is marked by favourable interest rates which are supportive for the investment cycle.

In this year Valamar was able to successfully finalize on time all its investments that were opening in 2019 despite the challenging environment in the construction sector in Croatia. Valamar was also successful in attaining a work-force for 2019 season which was not an easy task considering tight labour market conditions in Croatian hospitality sector. So, despite this major trend Valamar remained the most desirable employer in tourism in Croatia and it has more than 7,000 employees during high-season.

Valamar has also received a general prior approval from Supervisory Board for investments for the year 2020 amounting to HRK 599m. Investments include the beginning of the construction of a 5-star Pinea Valamar Collection Resort, the investment in Zagreb hotel in Poreč, the continuation of the investment in Istra Premium Camping Resort in Funtana and other smaller investment projects for guests and seasonal employees. Spending will also include continuation of investments in energy efficiency and digitalization projects. The final decision on 2020 investments will be rendered within this year.

At the same time, the Supervisory Board has approved investments of a total value of HRK 790m in a 5-star Pinea Valamar Collection Resort that will be located in the current Pical zone in Poreč. It should be completed within the next two years. Pical Hotel 2** in Poreč will be transformed into a luxury year-round 5-star Pinea Valamar Collection Resort with approximately 500 keys. The resort will be able to accommodate 1,700 guests and will have 7 bars and 7 restaurants, swimming pools spanning 2,200 m2, upgraded beach and the Sundance beach club, a congress centre for 1,200 guests, indoor pool and wellness centre, family oriented Maro facilities and services and a wide range of options for active holidays. The construction is staring this year and opening is planned in 2021.

Industrial Turnover Growth in April Amounts to 3.2% YoY in Croatia
According to the First Release published by Croatian statistical office yesterday, industrial turnover increased by 3.2% YoY in April, while strong improvement was reported on the foreign markets where industrial turnover increased 9.9% YoY.

Industrial turnover increased by 3.2% YoY with the growth slowing-down from 9.3% YoY in March, when it was the strongest since October 2018. These growth rates are in work-adjusted terms according to data released by the Croatian statistical office on Thursday. In seasonally-adjusted terms, total industrial turnover increased by 0.1% MoM in April, returning to positive territory after March when growth rate has amounted to -1.1% MoM. In the first two months of the year it was also in the positive territory when growth has amounted to 2.4% MoM in January and 1.3% MoM in February.

In terms of markets, strong improvement was reported on the foreign markets where industrial turnover increased 9.9% YoY. It is the third consecutive month for non-domestic industrial turnover which growth increased further as in March growth rate has amounted to 8.6% YoY. This suggests a continuation of the upward trend for the non-domestic industrial production in the next months. On the other hand, the domestic industrial turnover marked increase of only 0.2% YoY, which marks a strong decrease compared to March when domestic industrial turnover growth rate has amounted to 7.7% YoY.

Breakdown by branches in terms of use shows that the increase of the total industry line was on the back of non-durable consumer goods, intermediate and capital goods. Industrial turnover of non-durable consumer goods increased by 14.9% YoY in the month speeding up markedly from 5.3% YoY in March. Intermediate goods increased by 11.8% YoY in the month, and capital goods by 6.8% YoY, while the fall in industrial turnover with energy and consumer durables was reported. The upward trend in industrial turnover with capital goods continued in April as it expanded by 6.8% YoY in the month, speeding from 5.6% YoY growth reported in March. The industrial turnover with non-durable consumer goods also remained on an upward trend in April as the tourist season is approaching. These developments in our view are supportive of the expectation for industrial production continued rebound in the next months after it recovered reporting 4.6% YoY growth in January and has stayed since in positive territory for four consecutive months in a row.

How Often Have Slovenian Components Outperformed the Index

With a strong YTD Slovenian equity market performance, we decided to bring you a short overview of how often have Slovenian index components outperformed the index since the beginning of the year.

We are bringing you an overview of how often the current SBITOP components managed to beat the index since the beginning of the year until 25 June 2019. For this, we calculated the percentage of times (out of 118 trading days) in which an individual share recorded higher yield than the index.

Percentage of Days When the Share’s Performance Beat SBITOP (YTD)

As visible on the chart above, four out of eleven shares mostly performed better than the index on a daily basis. The first among them is Petrol, which recorded higher yield than SBITOP 55% of the times. Also the company’s share outperformed the index by 5.2 p.p.

Next comes KD Group, which recorded higher yield than SBITOP 55% of the times, while outperforming it by 59 p.p. (the highest of all components). Luka Koper follows, observing a higher yield 53% of the times, while outperforming the index by 0.6 p.p.

Next comes Sava Re, whose share price observed a higher yield 52% of times, while outperforming the index by 1.2 p.p. On the flip side, Telekom Slovenije recorded lower yield than SBITOP 56% of the times, which is the highest of all components. Its share performed 4.5 p.p. worse than the index as index in the period returned 10.6%, while Telekom Slovenije share returned only 6.1%. It is a return somewhat lower than its dividend yield which amounts to 6.9% while GSM will take place 30 August.

The share price performance also depends on dividend payout as companies whose dividends have already been paid out have seen their share price to decrease. So majority of SBITOP index constituents have paid out their dividend in June except for Petrol and Luka Koper who have ex-dividend date in August. Therefore Petrol and Luka Koper are one of the constituents who have seen best performance of their shares YTD. Petrol has outperformed the index by 5.2% which is approximately the same as its dividend yield, while its return YTD amounts to 15.8%. Luka Koper share had 11.2% return YTD while its dividend yield amounts to 4.8%, and its ex-dividend date it 28 August when we are expecting to see its share decrease. We have written on share prices reaction on ex-date and you can read about it on the link. Sava Re is the share which has seen the smallest decrease of share price on an ex-dividend date compared to other index constituents this year so far. Sava Re’s share price has decreased 2.9 p.p. while its dividend yield has amounted to 5.6%. Therefore, it is one of the best performing shares YTD and and it has YTD return of 11.8%.

Share Price Performance of SBITOP Components vs SBITOP Performance (YTD)