Today, we’re bringing you the overview of the P/E as well as the cash-adjusted P/E for Croatian blue chips, based on the latest available data.

First of all, a few disclaimers. The data for the balance sheet items (cash and cash equivalents) is based on the information released during the H1 2023 reports, while the P&L items (net profit) are based on the trailing twelve months (TTM) data, starting in H1 2023 and going backward. This is done to provide a like-for-like comparison. Also, HPB has been excluded as it operates in the financial/banking industry, and as such it isn’t comparable to other companies. Furthermore, even though Adris (pref.) is part of the CROBEX10 index, both Adris (regular) and Adris (pref.) were used here, as the cash and cash equivalents the Company applies to both shares. As such, the P/E and cash-adjusted P/E can be seen as one representing Adris as a whole, and not one or the other share types. Finally, the net profit to majority was used, while the number of shares outstanding, was adjusted for the number of treasury shares held by respective companies.

P/E of Croatian blue chip companies (TTM H1 2023)

Source: Companies’ data, ZSE, InterCapital Research

Starting off with the P/E, Atlantic Grupa recorded the largest one, at 28.5x. The Company did record an improvement in its share price (+17% YTD), but its net profit was still quite low (EUR 24.8m on a TTM basis), which led to this high P/E. Following them there is Valamar Riviera, at 28.4x. Valamar did not record that much of a gain this year (+4% YTD), while its TTM net profit amounted to EUR 18.4m, also in a quite similar situation as Atlantic Grupa. What both of these companies have in common is the cost increases that we have witnessed starting all the way back in the middle of 2021, which led to a profitability decrease. Valamar was also further affected by the pandemic, and subsequent price increases in 2022 and now in 2023. As such, both of the companies’ bottom lines are under pressure, leading to an increased P/E.

Next up, there is Hrvatski Telekom at a P/E of 20.3x, Adris at 16.4x, Span at 16.2x, and Končar, at 15.6x. Comparisons between these companies could be made, but one has to take into account the differences in the industries they operate in. As such, it would be wiser to compare companies that operate in the same industry, such as food production or tourism. Podravka and Atlantic Grupa are perfect examples of this; even though both companies recorded price growth, Podravka’s was a lot higher (+58% YTD), but its profitability also improved, due to two reasons. Firstly, the Company received tax incentives for investments. Secondly, it sold non-operating assets. As such, its numbers are somewhat inflated. HT’s P/E has been also improving, mainly as a result of faster net profit growth which the Company has recorded in the last couple of reports, while its share price grew by 11% YTD.

The next 3 companies, Adris, Span, and Končar, all recorded share price improvements on a YTD basis, at 12%, 30%, and 47%, respectively. Net profit was once again under pressure from cost growth. On the flip side, the only company to record a negative P/E was Atlantska Plovidba at -6.5x. Its share price growth has been somewhat subdued, especially compared to previous years, at 4%. Furthermore, the Company is tied to the movements in the shipping industry. While this allowed it to achieve some of the best results in its history in 2021 and partly in 2022, now that the shipping industry is under pressure due to the macroeconomic and geopolitical situation, so are the profits of the companies operating in it, including Atlantska Plovidba. As such, the results it recorded are what could be expected in the industry right now.

Cash-adjusted P/E of Croatian blue chips companies (TTM H1 2023)

Source: Companies’ data, ZSE, InterCapital Research

Moving on to the cash-adjusted P/E, the largest change can be seen by Adris, whose P/E declined by 3.5x, to 12.9x. This is to be expected, as Adris has app. EUR 221.8m of cash and cash equivalents, and a combined market cap of EUR 1bn. Ericsson NT also recorded a 3.5x decline in P/E, to 10.7x. Valamar and Končar recorded similar declines, of 3.4x and 3.1x, respectively. On the other hand, the smallest change was recorded by Podravka, whose P/E declined by 0.9x, while Atlantska Plovidba, recorded an “improvement” in P/E of 1x, to a negative -5.5x.

Cash (H1 2023) to current market capitalization of Croatian blue chip companies (%)

Source: Companies’ data, ZSE, InterCapital Research

Of course, the amount of cash and cash equivalents available for the companies in question played a huge role here. For example, Ericsson NT’s cash accounted for 25% of the market cap, Adris’s cash accounted for 22% of the combined market cap, and Končar’s cash accounted for 20% of the market cap. On the flip side, Podravka and Atlantic Grupa’s cash and cash equivalents were the lowest as compared to their market cap, at 6% and 9%, respectively.

During 9M 2023, INA recorded a revenue decrease of 20% YoY, an EBITDA decrease of 44.7%, and a net income of EUR 158m, a decline of 57.7% YoY.

Starting off with the revenue, in 9M 2023, it amounted to EUR 2.89bn, representing a decrease of 20% YoY. On a Q3 basis, it amounted to EUR 1.2bn, a decrease of 21.4% YoY. Ina noted that macroeconomic stabilization of hydrocarbon prices, despite some volatility, continued throughout 2023. This led to 33% lower realized prices as compared to 9M 2022, especially in terms of gas prices.

Breaking the revenue down by segment, in the “Refining and Marketing, including Consumer Services and Retail”, which is also the largest segment, the revenue amounted to EUR 2.84bn, decreasing by 20% YoY during 9M, while in Q3, it amounted to EUR 1.2bn, a 21.7% decrease YoY. In terms of the total refining throughput, it amounted to 1,661 kilo tonnes (kt), a reduction of 16% YoY, with a decrease that was recorded across both domestic and imported crude oil, as well as other feedstock. Looking at the refining product sales, in total they amounted to 2,977 kt, an increase of 6% YoY. Breaking this down by countries, Croatia (the largest single individual country) recorded refining product sales of 1,894 kt, a 10% increase YoY. Sales in B&H decreased by 7% to 427 kt, in Slovenia by 46% to 22 kt, in Italy by 9% to 13 kt. On the other hand, in Other markets it grew by 11% YoY to 622 kt. In terms of the total natural gas sales, they amounted to 431 million m³, representing a decrease of 26% YoY. Ina also noted that Rijeka Refinery successfully started at the end of April, which had a significant contribution to results.

Next up, in the “Exploration and Production” segment, during 9M 2023, revenue decreased by 40% YoY to EUR 432m, while in Q3, the decrease is even more significant, at 58.6% to EUR 134m. This came as a result of both lower hydrocarbon production, which amounted to 11,744 barrels of oil per day (boe/d), a 4% decrease YoY, as well as an average hydrocarbon price decrease of 33% YoY, to app. USD 74/boe.

In 9M 2023, OPEX amounted to EUR 2.7bn, a 14% decrease YoY. The most significant decrease was recorded in the costs of raw materials and consumables, which declined by 37% YoY, to EUR 930m. This is in line with the reduced hydrocarbon prices. Staff costs also recorded a 12% increase YoY, to EUR 187m, under the influence of elevated inflation rates. In terms of the EBITDA, it amounted to EUR 341m, representing a decrease of 45% YoY. In Q3, the decline is somewhat less substantial at 37%, with an EBITDA of EUR 157m. As such, during 9M and Q3 2023, the EBITDA margins amounted to 11.8% and 12.9%, respectively, a decrease of 5.25 p.p. and 3.24 p.p. YoY, respectively.

The net financial result amounted to EUR -20.4m, recording a decline of 89% YoY, mainly as a result of lower financial income (EUR 10.7m, -72% YoY), but also slightly offset by lower financial costs (EUR 31m, -37% YoY). Taken together, this led to a net income to majority of EUR 157.8m, a 58% reduction YoY in 9M, whilst in Q3 2023, it amounted to EUR 84.7m, a decrease of 48% YoY.

INA key financials (9M 2023 vs. 9M 2022, EURm)

Source: INA, InterCapital Research

INA key financials (Q3 2023 vs. Q3 2022, EURm)

Source: INA, InterCapital Research

In terms of CAPEX, it amounted to EUR 197.3m in 9M 2023, a 22% reduction YoY, and EUR 65.3m in Q3, a 13.6% reduction YoY. The 9M CAPEX decline is in line with different project dynamics and tendering. Ina also noted that the Rijeka Refinery Upgrade Project reached 81% total completion, while Upstream investment increased by 11% due to higher Croatia Onshore exploration activities.

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

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