IC Market Espresso 5 Oct 2022

 
ROE and Capital Structure of Selected SBITOP Constituents

For today we decided to present you with ROE and capital structure of selected SBITOP constituents.

For this analysis, we used Q2 2022 balance sheet numbers with trailing P&L items to get to the most consistent conclusions. One thing that is important to point out is that comparing the ROE or capital structure across the selected companies is not necessarily the best way to do the comparison, considering that many companies operate in different industries. Even so, it is worth seeing which Slovenian companies are more profitable and therefore have a better position in managing their prices and services (reducing costs, increasing prices of goods/services) thus increasing their ROE – and which are not. It should also be noted that financials (Triglav, Sava Re, and NLB) were excluded from the comparison regarding capital structure due to the nature of financial companies and their balance sheet.

ROE of Selected Companies (H1 2022)

Among the selected companies, Cinkarna Celje recorded the highest ROE of 20.8%, which is particularly interesting as the company is 100% equity funded. Also, consequently, the company operates with a high negative net debt. Cinkarna’s H1 2022 results boosted the company’s ROE as sales grew by as much as 35% YoY, achieving an above-average return on equity compared to the company’s history. Higher sales resulted in higher profitability. Growth in ROE was boosted by higher profitability achieved by Cinkarna, which came on the back of higher sales. Sales were purely driven by supporting the economic situation regarding the Titanium Dioxide segment. NLB comes next with ROE of 16.5%. NLB managed to significantly boost its bottom line mostly due to negative goodwill coming from the Sberbank (Slovenia subsidiary) acquisition of EUR 172.8m in first quarter, thus improving its ROE.  At the bottom of the line, Telekom Slovenije reported ROE of 6.7%, followed by Petrol with ROE amounting to 8.5% and Luka Koper with 12% ROE.

Capital Structure of Selected SBITOP Constituents

We also took a look at the capital structure of the observed companies. Financials were excluded for the sake of comparison, due to the nature of their balance sheet and financing structure. Cinkarna Celje leads the way with 100% equity. The company, besides operating with high operating profitability, has a strong financial position – the company virtually operates debt-free. Cinkarna is followed by Krka with 99.5%, Luka Koper with 85.2%, Petrol and Telekom Slovenije with 59.5% and 57.8% financing through the capital, respectively.

LJSE Trading Activity – September 2022

In September 2022, SBITOP declined by almost 15%, ending the month at 961.90 points.

The total equity turnover on the Ljubljana Stock Exchange amounted to EUR 28.3m, which represents a decrease of 31.3% MoM and an increase of 16% YoY. This would also mean that during the month, the average daily turnover amounted to EUR 1.29m.

We note that there were two block transactions during September 2022 of Krka, amounting to EUR 1.03m and NLB of EUR 364.4k.

Looking at the top 5 most traded stocks, they had a turnover of EUR 25m, which would account for 88.3% of the total turnover which is not surprising for the Slovenian market. Breaking this down further, Slovenia’s heavyweight Krka had the highest turnover, at EUR 12.8m (or 45.3%), followed by NLB with 4.4m (or 15.5%), Petrol with 3.6m (or 12.7%), Zavarovalnica Triglav with 2.3m (or 8%), and Cinkarna Celje with 2m (or 6.9%).

When it comes to prices, Slovenia’s main index SBITOP decreased by 14.8% during the month and ended under the 1,000 level at 961.90 points. At the same time, SBITOP TR decreased by 14.6% and ended the month at 1,203.92 points.

Looking deeper at the SBITOP constituents’ performance during the month, each of the constituents has recorded a decrease in share price. Petrol lost the most of its capitalization with a 20.1% decrease in share price in September, followed by Triglav with a 16.3% decline, Cinkarna with 15.1% and Unior with 14.1%. The biggest winner (or smallest loser in this care) was Luka Koper, with a loss of “only” 8.6%, followed by Sava Re with an 11.4% decline in price, Telekom Slovenije with an 11.6% decline and Krka with 13.1%.

Performance of SBITOP constituents (September 2022, MoM, %)

When it comes to YTD performance, SBITOP has reported an even higher decline of 23.6%. Looking deeper at the Slovenian SBITOP index on a YTD basis, the picture stays pretty much the same. Each of the constituents has recorded a decrease in share price since the beginning of the year. The biggest winner (or smallest loser in this care) was Luka Koper, with a loss of “only” 8.6%, followed by Cinkarna Celje with an 8.9% decline in price, Telekom Slovenije with a 14.2% decline and Triglav with 14.7%. The biggest losses were recorded by NLB with a 29.7% decline, followed by Sava Re and Petrol, both decreasing by 27.2%. Krka follows with a 27.1% decline.

Performance of SBITOP constituents (September 2022, YTD, %)

Trading Activity on Belex – September 2022

Belex (Belgrade Stock Exchange) published the monthly report on the trading activity in September 2022. According to the report, the total equity turnover amounted to EUR 1.2m, a decrease of 74.5% compared to August, translating into an average daily turnover of EUR 372.7k.

Looking over the companies, the most traded company on the exchange was Dunav Osiguranje, with a turnover of EUR 637k, which reported a double-digit decrease of 12% during the month. Next up, we have NIS, with a turnover of EUR 121.2k, which reported a slight increase of 1% MoM. Following them, we have Jugoprevoz Kruševac with a turnover of EUR 82.5k, Messer Tehnogas, with a turnover of EUR 67.6k, and Philip Morris Operations, with a turnover of EUR 31.4k.

Meanwhile, the top gainers during the month were mentioned Jugoprevoz Kruševac with an increase of 86.1% MoM, followed by Utva silosi and Dunav Grocka, which both increased by 33.3% On the other hand, Transport Voždovac has lost 27% of its value, PP Feketić lost 16.2%, while third on the list is Progres, which lost a 14.3% of its value.

The main index on the Belgrade Stock Exchange, BELEX15, decreased by 2.5% during the month and ended June at 827.37 points.