For today we are bringing you an overview of the share price performance of various sectors in the regional market from the beginning of 2022.

For this, we observed primarily the median YTD share price performance of companies in our wider coverage from Croatia, Bulgaria, Slovenia, Romania, and Serbia.

The end of 2021 was marked by positive sentiment on the regional equity markets, following the high vaccination rates, while a similar positive trend seems to be the case in the beginning of 2022 with most industries being in the green and some of them having YTD median share price change of 0% (apart from Infrastructure and Energy – reporting a decrease in mentioned category).

Observing the graph below, we can see that the banking sector has by far the largest increase with the median YTD share price increase of 9.7%. Banks remain positively correlated to bond yields and therefore higher yields could be a solid benefit to them. The same applies to insurance. Insurance, also belonging in the financials, reported a slightly worse median of YTD share price performance of 1.8%. Hawkish monetary policy by the same rationale applies for insurance.

The banks are followed by Diversified, with also high median YTD share price performance of 5.9%. The growth in this industry is mostly driven by the higher inflation and thus the higher price of goods these companies sell. This industry is mostly driven by Petrol and Podravka. Petrol reported very strong results during 2021 with high double-digit growth in sales YoY, while also increasing its bottom line and profitability on the level of 9M. Podravka also reported growing sales and it increased its operating profitability and bottom line. Shares of companies with low debt and lots of cash tend to appeal to investors who are putting their money to work as interest rates are rising. Petrol made a large acquisition of Crodux at the beginning of 2021, to be consolidated in the full-year results. On the other hand, Podravka is still not increasing its leverage but has announced investments in order to increase operating profitability.

Food, Funds/REITs, Telecommunication, and Insurance follow with median YTD share price increase of 2.1%, 2%, 1.8%, and 1.8%, respectively. As we are surrounded by a bullish monetary policy environment, investors are looking for assets that will perform well when interest rates are rising but also assets that could safeguard them from inflation. Therefore, Real estate investment trusts could be interesting to investors as these are securities that offer the opportunity to make diversified real estate investments without having to manage properties. Still, the best YTD return in Funds/REIT’s segment was performed by Romania Fondul whose portfolio return was mainly boosted by an increase in its holdings in Hidroelectrica and OMV Petrom. Hidroelectrica and OMV Petrom are also two holding with the highest share in Fondul’s portfolio.

Furthermore, Pharma and Shipping were also in green, both increasing YTD by 1% and 0.3%, respectively. Industrials, Tourism, and Utility didn’t report changes in median YTD share performance. The lowest median YTD share performance was reported by sectors Energy and Infrastructure with -1.8% and 0.8% YTD change, respectively.

TeraPlast, one of the representatives of industrial sector in BET index with market cap of EUR 471m, has published its preliminary 2021 results. The company announced a 55% increase in turnover, a 50% increase in net income and 36% increase in EBITDA YoY.

TeraPlast one of the largest PVC processors in the Eastern EU has published its preliminary 2021 results. As it is one of the newest members of the BET index (joining the Index in March 2020), we decided to bring you an overview of their 2021 results.

In the report, the Company has announced substantial double-digit growth across all KPIs (Key Performance Indicators). The Company announced a 55% increase in turnover to RON 615m, which is more than 55% higher than 2020 and almost double compared to 2019.

The Company’s EBITDA increased to RON 74.2m, an increase of 36% YoY, which means that its EBITDA margin reached 12.1%.  These results were positively influenced by the commissioning of scheduled investments (expansion of the capacities of the Installation Division and TeraPlast) but were also slightly slowed down by non-recurring costs related to the ramp-up of new investments, which amounted to RON 3.7m.

TeraPlast also had an outstanding performance on the foreign market, where the value of exports doubled compared to the previous year. This means that the share of exports in total turnover stood at 14.4% (which is in line with the 15% target announced at the beginning of 2021).

TeraPlast’s net profit increased by 50% YoY to RON 44.6m, due to the excellent results across all segments.

It should also be noted that the Company currently has a market cap of RON 2.33bn (EUR 471.4m), constitutes around 2.5% of the BET index, and has during 2021 paid out dividends in the amount of RON 0.13/per share, representing a dividend yield of 9.7%. The Company has also recently adopted a share buyback program (December 6th, 2021), for the repurchase of 7.5m shares (with a minimum market price equal to the stock exchange’s market price at the time of the repurchase and a maximum price set at RON 2/share).

2022 Budget

In 2022, the Company aims for strong growth, stemming from the increase in turnover, expansion of production capacity in its installation, compounds, and recycling segments. At the same time, they plan to invest EUR 11m in the production of stretch films, as well as expand their business further through M&A projects, which will lead to an EBITDA of RON 130m (+75% YoY). Lastly, the Company aims to further increase its exports, with a goal of a 40% increase in 2022.

In the period from 22 Feb 2021 till 6 Feb 2022 the value of taxable invoices increased by 25.1% YoY amounting to HRK 201.1bn. The spending amount is 5.6% higher than spending in a comparable period in 2019, yet again indicating positive sentiment. The value of last week’s taxable invoices is up 19.2% YoY, while compared to the week before it was also up 5.8%.

By looking at the latest announcements from the Tax Administration of the Republic of Croatia, in the period from 22 Feb 2021 till 6 Feb 2022, the value of taxable invoices increased by 25.1% YoY amounting to 201.1bn. This growth in taxable invoices represents positive sentiment in consumption, especially taking into consideration that consumption is yet again, 5.6% higher than in the 2019 comparable period (25 Feb 2019 – 9 Feb 2020). Taxable invoices in wholesale and retail trade in the period from 22 Feb 2021 till 6 Feb 2022 grew by HRK 18.5bn YoY (an increase of 15.9%) and it is also 7.3% above the value of spending level in this segment in the same period in 2019.

The value of taxable invoices in all segments in the week from 31 Jan to 6 Feb 2022 witnessed double-digit growth of 19.2% YoY. Compared to the same week in 2020 consumption witnessed an increase of 15% beating pre-pandemic spending. In the last week (31 Jan to 6 Feb) the spending in wholesale and retail trade picked up 10.1% YoY. Meanwhile, it is important to note that the value of taxable invoices in accommodation and food in a given week increased threefold – an increase of HRK 165.7m (amounting to HRK 238m) when compared to the same week in 2021. Compared to the same week in 2020, which is considered a pre-pandemic period, taxable invoices in accommodation and food are still down by 1.35%.

The value of taxable invoices in all segments in the week from 31 Jan to 6 Feb 2022, compared to the week before (24 Jan 2022 to 30 Jan 2022) was up 5.8%, mostly driven by the value in wholesale and retail in the same period which increased by HRK 963.5m. When looking at the value of taxable invoices in accommodation and food service, it increased slightly by 7.4% compared to the week before.