Since most companies in the region have published their FY 2018 financial reports, we decided check what impact did the results have on the company’s share prices. To do so we observed the price performance recorded since the beginning of the year until the end of February.

Croatia

Koncar recorded the largest share price increase in Croatia, thus far, with the company’s share ending February up 15%. In second place comes ZABA who, along with a set of nice results, recently announced a dividend of HRK 5.79 DPS which translates to a dividend yield of 9%. Overall the strongest performers on the Croatian market thus far have been industrial companies and companies which came out with a higher than anticipated dividend proposals (e.g. HT). Meanwhile last year’s top performers Podravka and Atlantic Grupa recorded a growth of 2% and 3%, respectively. On the flip side investor seem less keen on the tourism sector with Maistra and Arena Hospitality posting a flattish share price performance, while Valamar feel 8% since the beginning of the year.

CROBEX Components Share Price Performance (%)

Source: Bloomberg, InterCapital Research

Slovenia

Although only one Slovenian company has released their financial results for 2018 thus far, almost all companies ended February in the green. Leading the list is the KD Group whose share price went up 21% since the begging of the year. As a reminder, KD Group sold their stake in Adriatic Slovenica to the Generali Group last year for EUR 245m. Upon the receiving all necessary approvals the deal was finalized in mid-February 2019. Telekom Slovenije comes in second place with the company’s share up 10% after they announced the sale of their share in Blicnet. Although the amount for which they sold their share is still unknown, it was announced by the company that it will significantly exceeds its book value of EUR 16m. Meanwhile the recently IPOed NLB bank continues to record a share price increase with their share price up 3% YTD and 23% up since the public offering. On the flip side Krka is the only company to end the observed period in the red, however as the company’s share price is down only 1% there is no need for concern.

SBITOP Components Share Price Performance (%)

Source: Bloomberg, InterCapital Research

Serbia

Sojaprotein’s share price soared 28% YTD on the back of a takeover bid issued by the Victoria Group for the remaining 31.82% of the company. In second place comes Komercijalna Banka which has recently filled headlines as a candidate for privatization. According to the media, a tender for the bank’s privatization can be expected in May or June of 2019. On the flip side, the share price of the Belgrade Airport has decreased 60% as the ex-date for the company’s lucrative dividend has past.  

BELEX15 Components Share Price Performance (%)

Source: Bloomberg, InterCapital Research

Bulgaria

Bulgaria recorded the worst performance in the observed period with the majority of shares ending the period in the red. An exception would of course be the CB Central Cooperative Bank whose share price went up 23% since the begging of the year. On the flip side, Albena led the laggards with a 17% decrease in share price value after the company posted a worsened bottom line result.

SOFIX Components Share Price Performance (%)

Source: Bloomberg, InterCapital Research

Romania

After most Romanian companies ended 2018 in the red it seems that the improved outlook regarding the newly introduced tax legislation, coupled with solid financial results, has added some confidence to investors. The best performing companies in the observed period were Nuclearelectrica and OMV Petrom who both recorded improved results on all lines, despite the additional tax burden. Furthermore, OMV Petrom also proposed a dividend of RON 0.027 per share to sweeten up the share a bit more. As a result, both shares have seen a 14% increase in value since the begging of the year. Following closely behind is Purcari, whose strong FY 2018 results (net profit +58% YoY) resulted in a 13% YTD increase in share price value. On the flip side, Banca Transilvania led the laggards as high tax expenses left the bank’s bottom line flattish, despite improvements seen on the top line.

BET Components Share Price Performance (%)

Source: Bloomberg, InterCapital Research

With the plethora of reports published last week, we left Plava Laguna for today not to be drowned among others. The tourism Group reported solid improvements on all lines, helped by investments which enabled higher pricing, better financial arrangements resulting in lower interest expenses and tax incentives.

In 2018, Plava Laguna had 4.8m overnights altogether (-1.1%), out of which 2.5m in hotels (-2.5%) and 2.3m in car camps (+0.5%). Despite a lack of volume growth, average prices were up by 4.0% in hotels and 7.1% in car camps. Consequently, sales were up by 2.6% to HRK 1.1bn (+28m). There was also a one-off positive impact related to sales of assets booked under other operating revenue (+8m). Summed up, total operating revenue was up 3.5% to HRK 1.1bn.

EBITDA margin was somewhat improved (from 39.9% to 41.5%), and the absolute amount of EBITDA increased by 9.3% to HRK 467m (+40m). Among individual items, staff cost increased most (by HRK 4.5m or 1.8%) but this is actually less than what we would have expected, taking into account the difficulties Croatian tourism companies face finding workers. The share of staff costs in sales remained flattish (22.4% vs 22.6% in 2017). Management’s communicated EBITDA amounts to HRK 447m (+4.7%).

Plava Laguna booked a HRK 46m increase in D&A costs (+28%), but this can be attributed to changed depreciation policy in the recently merged Istraturist alongside with the effect of investments. Solely due to this reason, EBIT is down 2.3% to HRK 255m (-6.0m).

Further down the P&L, we see three more positive items:

• Net financial expenses are down by HRK 55m to HRK 5.3m (a positive effect of HRK 7m), mostly attributable to lower interest expenses.
• Profit from associates is up by 50% to HRK 28.5m (a positive effect of HRK 9.5m). This related to Adriatic Luxury Hotels.
• Tax was down by almost 100% (a positive effect of HRK 42m) as Plava Laguna booked tax incentives related to investments made in 2018 and planned until 2020.

2018 CAPEX amounted to HRK 483m (EUR 60m), up by 180% YoY and touching the highest value in the Group’s recent history.

Net debt is up by 67% to HRK 483m, but we believe the 1.04x net debt / EBITDA looks very good.

Plava Laguna’s 2013-2018 Major P&L Lines (HRKm)

Trading statistics for February 2019 show an average daily turnover of roughly EUR 1.3m (-1% YoY). Meanwhile, the major index CROBEX ended February up by 2.1%.

The Zagreb Stock Exchange published their trading statistics for February 2019 on Friday, showing an average daily turnover of roughly EUR 1.3m. For comparison, the average daily turnover decreased by 1% when compared to the same period last year. Of the total value traded in the period (excluding block transactions), HT generated 22%, followed by Valamar with 10%, Zagrebacka Banka with 8%, Adris (preferred shares) with 7% and Maistra with 6%. These 5 companies generated more than half of the turnover recorded by the entire market.

Along with the average daily turnover, the total equity market capitalization is also down by 1% YoY. Ina’s share price remains the biggest influence on the total exchange equity market capitalization, accounting for about 24% of the total value. Next come two Croatian banks– Zagrebacka Banka and PBZ with 15% and 11%, respectively. Afterwards, HT holds 10% while Adris Group’s regular shares account for 4% of the total market capitalization value.

When compared to the beginning of the month the major index CROBEX went up 2.1%, ending at 1.798,98. On the flips side all four sector indices ended the month in the red with CROBEXkons (construction) down 16.7%, followed by CROBEXtran (transport) -12.3%, CROBEXnutr (food) -4.6%, CROBEXindu (industrial) -0.27% and CROBEXturi (tourism) -0.03%.