IC Market Espresso 9 May 2023

Triglav Issues A Profit Warning Due to Regulation on Supplemental Health Insurance

Today Triglav issued a profit warning as a result of the Slovenian Government setting the maximum price of supplemental health insurance premiums. Based on the likely scenario, as stated by Triglav, it is estimated that the Group’s planned EBT for 2023 may decrease by 25-40% compared to the initially planned range of EUR 95-110m.

This morning Triglav issued a profit warning, as a result of the Slovenian Government setting the maximum price of supplemental health insurance premium. The Decree introduced immediate regulation of supplemental health insurance prices, obliging the Group to continue implementing supplemental health insurance until it is abolished. The Decree will be in force until the end of 2023, but it is expected that, even before its expiration, the aforementioned Act will be amended in such a way as to abolish the existing supplemental health insurance system. As stated, “The Group supports the amendment of said Act to take place as soon as possible, because the premium amount, which is determined by the Decree, is not sufficient to cover supplemental health insurance claims. “

As a result of the aforementioned, Triglav estimates its EBT for 2023, which was initially planned in the range of EUR 95-110m, may decrease around 25-40% due to the loss in the health insurance segment. In the event that supplemental health insurance will be abolished by law as of 1 September 2023, the Group estimates that the loss from health insurance will reduce Group’s EBT by 25%. In the scenario where supplemental health insurance is not abolished by law and the Decree continues to apply until the end of 2023, the mentioned impact might be even higher and result in 40% lower EBT.

Anticipation Builds: Slovenian First Quarter Financial Reports on the Horizon

The total equity turnover on the Ljubljana Stock Exchange decreased by 9.6% MoM, while SBITOP grew by 2.5% MoM, ending it at 1,229.81 points. We are entering a period of Q1 earnings announcements thus preparing for possible higher trading volume and volatility in periods ahead.

The total equity turnover on the Ljubljana Stock Exchange amounted to EUR 24m, representing a decrease of 14% YoY, and 9.6% MoM. This would also mean that the average daily turnover in April amounted to EUR 1.3m. However, we note that the substantial YoY decrease was exclusively due to exceptionally strong trading in April last year which amounted to EUR 27.8m. It was a period of geopolitical uncertainty, marked by the war in Ukraine, the start of sanctions, and the rise in the volatility of energy prices.

In terms of the indices, Slovenia’s main index, SBITOP, increased by 2.5% MoM and ended the month at 1,229.81 points. At the same time, SBITOP TR also grew 2.5% MoM, ending the month at 1,554.84 points.

In terms of the block trades, this month’s block turnover amounted to EUR 2.3m, which would mean that the block turnover accounted for only 9.7% of the total equity turnover. In total, only 2 block trades were made during the month, NLB at EUR 1.2m, and Krka at EUR 1m. Looking at equity turnover, the largest turnover was recorded by Krka, with a turnover of EUR 8.4m (or 35.1% of the total equity turnover), followed by NLB, at EUR 5.8m (or 24.2% of the total), Cinkarna Celje at EUR 1.9m (or 7.9%), Luka Koper at EUR 1.6m (or 6.6% of the total) and Triglav at EUR 1.3m (or 5.2% of the total). In fact, this would mean that the top 5 most traded stocks accounted for 79% of the total turnover, while the top 10 would account for 90%.

Performance of SBITOP constituents (April 2023, MoM, %)

Source: Bloomberg, InterCapital Research

Looking at the SBITOP constituents’ performance during the month, we can see that 6 out of 9 companies recorded growth during April, while Cinkarna Celje noted the biggest decline out of all constituents, amounting to “only” 3.5%. The largest increase was recorded by Luka Koper, with a noteworthy growth of 12%. Luka Koper was followed by Krka with a 3.7% share price increase. Besides Krka, both Petrol and NLB as a heavyweight in the index noted a low single-digit growth of 2.6%. Overall, this resulted in SBITOP noting a 2.5% growth.

The positive trend of stocks from Q1 on the Ljubljana Stock Exchange continues. Despite the lower volume of stock purchases this month, the market has still grown by 2.5%. Financial reports are expected in May, and any weakness or slowdown in Slovenian companies will be closely monitored.

Performance of SBITOP constituents (2023 YTD, %)

Looking over YTD performance using the latest data available, one can notice a very strong quarter for Slovenia. Overall, SBITOP noted an 8.4% growth. The growth in the index as a whole was driven both by heavyweights and companies with less than 5% in SBITOP weight. The biggest increase was noted by Luka Koper (+14.3%) on the back of this month’s performance. Triglav also noted a double-digit growth of 12.5% YTD. Further, Krka, Cinkarna Celje and NLB follow with 9.8%, 8.5% and 8.3% growth – giving a solid base for SBITOP to grow. The only company to note a share price decline is Equinox with a 5.9% YTD decline.

Source: Bloomberg, InterCapital Research