IC Market Espresso 8 Mar 2023

Another Strong Month on ZSE in 2023

In February 2023, CROBEX experienced another strong increase of 5.5% MoM, ending the month at 2,227.65 points.

February is another month this year to note a strong recovery of CROBEX, increasing further by 5.5% (after a solid 6.6% in January). The total equity turnover on the exchange, however, is also telling its story. In February 2023, it amounted to a total of EUR 21.7m, which represents a decrease of 51.5% YoY, but also a 30.1% MoM increase. Further, during February only one block transaction was made – this being HT with an amount of EUR 527k. This would mean that during the month, the block turnover accounted for only 2% of the total equity turnover. Finally, this would also imply an average daily turnover of EUR 1.1m.

Turning our attention to the top 10 most traded stocks, in total, they recorded a turnover of EUR 15.2m, accounting for 70% of the equity turnover during the month. The highest turnover was recorded by Span, at EUR 3m, or 14% of the total, followed by Valamar Riviera, at EUR 2.3m, or 10.7% of the total, Zaba, at EUR 1.9m, or 8.7% of the total, and HT at EUR 1.8m of turnover, or 8.2% of the total. This would also mean that the top 5 most traded stocks accounted for 47.3% of the total turnover.

Looking at the largest index on ZSE, CROBEX, we note that it recorded an increase of 5.5% during the month, and ended at 2,227.65 points. We note this is the second month this year already to note a solid performance of CROBEX after a 6.6% return in January. CROBEX10 also experienced a solid increase, growing by 3.4% MoM, and ending at 1,277.13 points.

Performance of CROBEX constituents in February 2023 (MoM, %)

Source: ZSE, InterCapital Research

In the CROBEX10 itself, we can see almost all constituents in the green for the month. The largest increases were recorded by Arena Hospitality Group, which grew by 9.9%, followed by Valamar Riviera, at 8.6%, Atlantska Plovidba, at 6.7%, HT, at 4.1% and Končar, at 4%. Coming back to the CROBEX however, due to the weights that stocks have in the index, the real drivers of the growth are slightly different than the top companies by individual performance.

YTD performance of CROBEX10 constituents (%)

Source: Bloomberg, InterCapital Research

Looking at the same data since the beginning of the year, AD Plastik noted the best relative performance with a 21% share price increase in 2023 so far. This increase came on the back of performance during January. We have already noted this kind of return is uncommon and happened due to an exceptionally low base effect due to a few ongoing negative impacts on AD Plastik’s operations. Further, Podravka, which is the biggest heavy weigher in CROBEX10 with more than 20% in the index itself, also noted a strong double-digit performance amounting to 14.3%. Podravka drove CROBEX’s performance since the start of the year most significantly. Podravka is closely followed by three other constituents: Končar, Arena Hospitality and Adris Group with 12.4%, 12.1% and 11.8% share price increase in 2023 so far. Finally, we note that each of CROBEX10 constituents noted a positive share price development this year, so far.

Croatian Tourism Overview – February 2023

In February 2023, overall tourist arrivals in Croatia equaled 278k, which is an increase of 19% YoY. At the same time, tourist nights amounted to 758k, representing an increase of 14% YoY.

Recently, the Croatian Tourist Board, HTZ, has released its latest monthly report on the developments and changes recorded by Croatian tourism, with a particular focus on the number of arrivals and tourist nights. According to the report, in February 2023, the total number of tourist arrivals amounted to 278k, representing an increase of 19% YoY. On the other hand, tourist nights amounted to 758k, which is an increase of 14% YoY.

Looking at the tourist arrivals first, we can see that out of the total, foreign tourists accounted for 146.8k, representing 53%, and they recorded an increase of 21% YoY. Meanwhile, domestic tourist arrivals amounted to 131.2k, or the remaining 47%, with an increase of 16% YoY. As February 2023 is still quite far off from the pre and main summer seasons, the number of arrivals is still quite limited. However, as 2022 has been a return to form for Croatian tourism (if not in the number of arrivals/nights, then at least in revenue), the continued growth we are seeing here is quite encouraging. This is especially true if we take into account the continue disposable income pressures faced by tourists across Europe due to inflation, especially in terms of food and energy costs. This also lead to higher prices of accommodation, which had an impact on the overall number as well. In fact, when compared to 2019, the total tourist arrivals are 3% lower, however, when broken down into foreign and domestic arrivals, we can see that this decline was marked primarily by foreign tourist arrivals declining, in this case by 17%. On the other hand, domestic tourist arrivals increased by 19%.

Moving on to the tourist nights, we can see that in total they amounted to 758k, an increase of 14% YoY. Of this, foreign tourists accounted for 474.6k, or 63% of the total, while domestic tourists accounted for the remaining 283.4k, or 37%. In terms of growth, foreign tourist nights grew by 18% YoY, while domestic tourist nights increased by 8%. Compared to 2019, total nights are actually 4% higher, with foreign tourist nights down by only 1%, while domestic tourist nights increased by 14%. This would also mean that the average stay per person amounted to 2.73, a decrease of only 4.3% YoY.

Total tourist arrivals and tourist nights in Croatia (January 2019 – February 2023)

Source: HTZ, InterCapital Research

Looking at the tourist nights by the type of accommodation, 59% stayed in hotels, 25% in private accommodation, 3% in camps, while 13% stayed in other types of accommodation. In terms of tourist nights by country of origin, domestic tourists accounted for 37% of the total, followed by Slovenia at 10%, Bosnia & Hercegovina at 7%, Austria at 6%, and finally, Germany at 5%.

Meanwhile, in terms of most visited counties, we can see that Istra continued to record the highest number of tourist nights, at 175.1k, followed by Kvarner at 131.7k, Grad Zagreb at 124.8k, Splitsko-dalmatinska at 86.4k, and Dubrovačko-neretvanska, at 45.9k.

Even though the data for the first 2 months of the year cannot give us an indication of the trends that are most interesting for the Croatian tourism industry, and that is the pre and summer-season expectation, we can see several things happening in February. First of all, the higher amount of hotel usage combined with a lot of domestic tourist nights can tell us that most of the travel is either business travel, or people traveling to visit family members. For foreign tourists, Istria and Kvarner still remain the regions of choice for foreign tourists.