Theme of the Day: Overview of Atlantic Grupa’s Historical Trading Multiples Bond, Money and Currency Markets: Romanian GDP Increased by 4.8% in the Ultimate Quarter of 2016 Croatian Equity Market: HT Lays off Another 100 Workers, PBZ Proposes Dividend of HRK 25.33 per Share Regional Equity Market: Earnings Season Kicks in Romania Global Equity Market: U.S. Equities Post New Records Technical Perspective - Region: HTRA ZA - Resistance @ 178,50 Technical Perspective - Global: DAX - Support @ 11430 IC Daily Highlights •[CROATIA] HT plan to lay off another 100 workers •[CROATIA] PBZ Bank's AGM will take place on 27 March, Management proposes HRK 25.33 DPS •[CROATIA] Tehnika's preliminary 2016 results show sales down 28% (to HRK 454m), net profit HRK 0.9m (+91%) •[SLOVENIA] Luka Koper inaugurates new craine rails and two rail-mounted gantry cranes •[ROMANIA] Banca Transilvania's 2016 cons net profit down 48% to RON 1.3bn •[ROMANIA] Nuclearelectrica's 2016 non-cons net profit down 27% to RON 109m •[ROMANIA] Transelectrica's 2016 non-cons net profit down 21% to RON 286m •[ROMANIA] FP's 2016 net profit RON 447m (from a RON 565m loss) •[ROMANIA] BVB's 2016 profit up 19% YoY •[ROMANIA] Q4 GDP growth rate 4.7% YoY (flash estimate), FY2016 GDP up 4.8% •[SERBIA] Stock Exchange will be closed today and tomorrow •[BULGARIA] Q4 2016 unemployment rate was 6.7% •[BULGARIA] Q4 2016 GDP growth rate 3.4% YoY (flash estimate) •[BULGARIA] Q4 2016 avg. gross monthly wage rises 8.2% YoY IC Daily Newsflash InterCapital Contacts Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures IC MARKET ESPRESSO InterCapital Research 15 February 2017 Quote of the Day: „As a speculator you must embrace disorder and chaos.” Louis Bacon Ivan Dražetić Money Market and Fixed Income, Dealer Phone: + 385 (0)1 4825 852 E-mail: [email protected]Kristina Pukšec Head of Fixed Income and Money Market Phone: + 385 (0)1 4825 854 E-mail: [email protected]IC.trader InterCapital.hr 1 Đivo Pulitika Analyst Phone: + 385 (0)1 4825 867 E-mail: [email protected]Croatia I Slovenia I Romania I Bulgaria I Serbia Margareta Maresić Junior Analyst Phone: + 385 (0)1 4825 857 E-mail: [email protected]Renata Čempuh Head of Front Office Phone: + 385 (0)1 4825 890 E-mail: [email protected]Danijel Delač Head of Brokerage Phone: + 385 (0)1 4825 894 E-mail: [email protected]Filip Majić Broker Phone: + 385 (0)1 4825 896 E-mail: [email protected]Marin Onorato Money Market and Fixed Income, Dealer Phone: + 385 (0)1 4343 180 E-mail: [email protected]Marcel Dimač Junior Analyst Phone: + 385 (0)1 4825 858 E-mail: [email protected]Date Announcement 15-Feb-17 Fondul Proprietatea - FY 2016 (prelim.) 15-Feb-17 Banca Transilvania - FY 2016 (prelim.) 15-Feb-17 Transgaz - FY 2016 (prelim.) 15-Feb-17 Transelectrica - FY 2016 (prelim.) 15-Feb-17 Nuclearelectrica - FY 2016 (prelim.) 16-Feb-17 OMV Petrom - FY 2016 results (prelim.) 16-Feb-17 Romgaz - FY 2016 (prelim.) 20-Feb-17 Petrol - FY 2016 results 23-Feb-17 TLSG - FY 2016 (prelim.) Upcoming Announcements Company Investment Thesis VALAMAR RIVIERA One of the largest hospitality groups Favourable accommodation positioning Strong growth potential PETROL GROUP Stable cash flow High level of debt Strong retail player ADRIS GROUP Strategic shift Strong cash position Growth potential in insurance FONDUL PROPR. Managed by Franklin Templeton Significant discount to NAV Possible privatizations of portfolio companies Top Regional Investment Stories 80 90 100 110 120 130 140 150 16-Feb-16 16-May-16 16-Aug-16 16-Nov-16 CRO Index SBITOP Index BELEX15 Index BET Index SOFIX Index Source: Bloomberg Regional indices TTM
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Theme of the Day:
Overview of Atlantic Grupa’s Historical Trading MultiplesBond, Money and Currency Markets:
Romanian GDP Increased by 4.8% in the Ultimate Quarter of 2016Croatian Equity Market:
HT Lays off Another 100 Workers, PBZ Proposes Dividend of HRK 25.33 per ShareRegional Equity Market:
Earnings Season Kicks in RomaniaGlobal Equity Market:
U.S. Equities Post New Records Technical Perspective - Region:
HTRA ZA - Resistance @ 178,50Technical Perspective - Global:
DAX - Support @ 11430
IC Daily Highlights
•[CROATIA] HT plan to lay off another 100 workers•[CROATIA] PBZ Bank's AGM will take place on 27 March, Management proposes HRK 25.33 DPS•[CROATIA] Tehnika's preliminary 2016 results show sales down 28% (to HRK 454m), net profit HRK 0.9m (+91%)•[SLOVENIA] Luka Koper inaugurates new craine rails and two rail-mounted gantry cranes•[ROMANIA] Banca Transilvania's 2016 cons net profit down 48% to RON 1.3bn•[ROMANIA] Nuclearelectrica's 2016 non-cons net profit down 27% to RON 109m•[ROMANIA] Transelectrica's 2016 non-cons net profit down 21% to RON 286m•[ROMANIA] FP's 2016 net profit RON 447m (from a RON 565m loss)•[ROMANIA] BVB's 2016 profit up 19% YoY•[ROMANIA] Q4 GDP growth rate 4.7% YoY (flash estimate), FY2016 GDP up 4.8%•[SERBIA] Stock Exchange will be closed today and tomorrow•[BULGARIA] Q4 2016 unemployment rate was 6.7%•[BULGARIA] Q4 2016 GDP growth rate 3.4% YoY (flash estimate)•[BULGARIA] Q4 2016 avg. gross monthly wage rises 8.2% YoY
IC Daily Newsflash
InterCapital Contacts
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures
IC MARKET ESPRESSOInterCapital Research
15 February 2017
Quote of the Day:„As a speculator you must embrace disorder and
chaos.”
Louis Bacon
Ivan DražetićMoney Market and Fixed Income, DealerPhone: + 385 (0)1 4825 852E-mail: [email protected]
Kristina PukšecHead of Fixed Income and Money MarketPhone: + 385 (0)1 4825 854E-mail: [email protected]
Overview of Atlantic Grupa’s Historical Trading Multiples
Theme of the Day
IC MARKET ESPRESSO
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 2 IC.traderInterCapital.hr
Key financials from 2009
EV/EBITDA, horizontal line represents the median value
Sep-2010ATGR publishedit's takoing overKalnička Voda
Jun-2010takeover of Droga
Kolinska
Nov-2012debt refinancing
with EBRD, IFCand 4 comm. banks
Sep-2013investments in a
new factory inNova Gradiska Sep-2013
taking over the Unilever
distribution
Nov-2014taking over the
Foodland
May-2016reschedules loans
with EBRD, IFC until 2021
The median P/E in the period post 2010 stands at 14.6x, coupled with 8.2x EV/EBITDA. The shares are currently traded at 12.8x P/E and 9.17x EV/EBITDA based on trailing 12M financials.
In the light of the positive developments on the Croatian stock market lately, Atlantic Grupa’s share didn’t lag far behind. It showed a solidperformance, as from the beginning of the year it went up by 6.75% (based on yesterday’s closing price pf HRK 943.76), while CROBEX increased by8.72%. Therefore, for today we decided to see the historical development of Atlantic’s key financials and valuation. Note that we’ve used trailing(past) financials to calculate the multiples.
Atlantic Grupa went public in November 2007 with HRK 935 per share, which gave a P/E of 45.65 and an EV/EBITDA of 17.67. At yesterday’s closingprice P/E stood at 12.80 and an EV/EBITDA at 9.17. The graphs are showing that multiples were in a falling trend from 2011 onwards, and arecurrently somewhere near their median values for the post-2010 period.
In the course of the last six years Atlantic Grupa’s business was marked by several major things, among which we would emphasize the takeover ofDroga Kolinska and Kalnička Voda in 2010, signing a deal on debt refinancing with EBRD, IFC and 4 commercial banks, the beginning of investmentin a new factory in Nova Gradiška in September 2013, takeover of the Croatian and Slovenian distribution for Unilever at the end of 2013, takeoverof Foodland in 2014 and another debt refinancing deal with EBRD and IFC in 2016.
Romanian GDP Increased by 4.8% in the Ultimate Quarter of 2016
Bond, money and currency markets
IC MARKET ESPRESSO
InterCapital domestic bond quotes Bloomberg: INKA5 <GO>BBG User: INTERCAPITAL FI
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 3 IC.traderInterCapital.hr
Romanian Institute of Statistics published yesterday that GDP grew by 4.8% in 2016, thelargest GDP growth among EU28 countries. In Q4 2016 seasonally adjusted GDPincreased by 4.8% YOY, while it grew 1.3% compared to Q3. QOQ growth shows that Q3decelerated growth was a one-off event, implying economy has not been losing steam.
While personal consumption growth was massive in H1 2016, Q3 data showed modestdeceleration. At that moment someone could think that we’re watching at the very endof robust growth, yet recent data on retail sales and sentiment indicators (both of whichare leading indicators) showed there is more to story than that. Growth in last quarter of2016 was most likely driven by increase in personal consumption, reflecting robustdomestic demand at the turn of the year.
Last year’s GDP growth of 4.8% is the highest growth since 2008 and the growth is stillnot showing signs of slowing down. Nevertheless, there are several challengesRomanian economy has to meet by the turn of the current year. First, there weremassive protests accompanying a high degree of social unrest. Second, the budget lawstill has a lot a lot of moving parts (i. e. parts subject to sudden change). Namely, newbudget law expects deficit to reach 3.0% GDP, however recently promised wage andpension hikes have not yet been fully implemented into the budget. Also, governmentexpectations are built upon 5.2% YOY GDP growth, which could be quite a challengeconsidering higher energy prices, a non-existent slack on the labour market and previouswage hikes.
All in all, one has to admit that Romania saw the single largest GDP growth in EU28 lastyear. The deterioration of public finance is still something to worry about since publicexpenditures are like a kitten stuck in a tree – once it goes up, it doesn’t know how tocome down on its own.
Definite focus today is expected on Romania, as some of the main BET components publishedpreliminary 2016 statements this mornings. Here we bring you a brief overview:
[Romania – Banca Transilvania – TLV RO] The comparability of 2016 results to 2015 isimpacted by the big positive one-off related to the takeover of Volksbank in 2015 (RON 1.7bn).Still, Banca Transilvania recorded sound organic growth. On a consolidated level, net interestincome is down 10% to RON 1.8bn, followed by a 12% increase in net fee and commission income(to RON 545m). Net income is down by 48% to RON 1.3bn (up 60% excluding gains fromacquisition).
[Romania – Nuclearelectrica – SNN RO] Non-cons operating revenues are down 6% to RON1.7bn. This was followed by a 3% decrease in EBITDA and a 1% decrease in EBIT. Net profit standsat RON 109m, down by 27% YoY. Although EBIT was flattish, the bottom line was impacted bynegative FX.
[Romania – Transelectrica – TEL RO] Non-cons EBIT from profit allowed activities was down by35% to RON 277m. Zero profit activities recorded EBIT of RON 88m (+260%). Summed up, totalEBIT is down 19% to RON 364m. With rather unchanged result from financial activities, thebottom line is down 21% to RON 286m.
Earnings Season Kicks in Romania
Regional Equity Market
IC MARKET ESPRESSO
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 4
Yesterday Hrvatski Telekom published that within the scope of transformation a workersurplus was determined and that the company intends to reduce the number ofemployees by the end of March 2017. As a part of the restructuring process thecompany has been reducing its workforce for years now. At the end of 2010 it had 6,332full time employees, which was down at 4,639 at the end of Sep 2016 (-26.7%).However, the company pointed out that this will be the lowest number of workersleaving the company since the start of the transformation process. According to thepublication, the average severance payment cost per employee will amount to HRK230k, or about HRK 23m in total. In comparison, in 2014 HT paid cc. HRK 138m, in 2015cc. HRK 67m and in 2016 cc. HRK 51m.
The Management Board of the second largest bank in Croatia measured by total assets,PBZ Bank, proposed dividend payment in the amount of HRK 25.33 per share via theZagreb Stock Exchange. Among other topics, the discussion on the 2016 financial reportsand use of profits will be held on General Assembly on 27 March. The ex-dividend date is13 April, while the payment is envisaged on 20 April at the latest. Compared to the pricea day before this announcement, the amount of dividend gives a 2.96% yield.
HT Lays off Another 100 Workers, PBZ Proposes Dividend of HRK 25.33 per Share
Croatian Equity Market
Index fundamentals
Daily market snapshot
Volume: EUR 2.09m
* ATPLRA ZA and ADRSPA ZA are excluded from CROBEX multiples and ratios due to large one-off event / Market snapshot includes only main index components
IC.traderInterCapital.hr
90
95
100
105
110
115
16-Feb-16 16-May-16 16-Aug-16 16-Nov-16
SBITOP Index
Source: Bloomberg
80
90
100
110
120
130
140
16-Feb-16 16-May-16 16-Aug-16 16-Nov-16
BELEX15 Index
BELEXLIN Index
Source: Bloomberg
85
90
95
100
105
110
115
120
14-Jan-16 14-Apr-16 14-Jul-16 14-Oct-16
BET Index
BET-BK Index
Source: Bloomberg
90
95
100
105
110
115
120
125
130
135
140
145
16-Feb-16 16-May-16 16-Aug-16 16-Nov-16
SOFIX Index
BGBX40 Index
Source: Bloomberg
Banca Transilvania 3,74 Intereuropa 13,94% Industrial Capital Holding -5,56%
BRD 1,40 Dalekovod 11,52% CB Central Cooperative Bank -4,58%
U.S. equities closed higher Tuesday, posting new record highs, as investors digestedtestimony from the top Federal Reserve official.
Fed Chair Janet Yellen said in prepared remarks that waiting too long to raise interestrates would be "unwise," given the rise in inflation and economic growth. Marketexpectations for a rate hike next month rose to 23 percent from 16 percent followingYellen's remarks. Tuesday also marked the first time Yellen testifies following PresidentDonald Trump's election.
"The markets were anxiously awaiting Chair Yellen's comments, but not expectinganything out of the ordinary," said Myles Clouston, senior director at Nasdaq AdvisoryServices. "There's also some momentum chasing the market higher; we are at all-timehighs."
U.S. Equities Post New Records
Global Equity Market
IC MARKET ESPRESSO
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 5 IC.traderInterCapital.hr
STOXX EUROPE 600 SECTOR PERFORMANCE % Day % YTD % 1M % 3M % 6M % 1Y % Day % YTD % 1M % 3M % 6M % 1Y
Today we are looking @ daily HTRA graph. It continues to move upwards and resistancethat provides high from 23/12/2013 @ 178,50 is in the reach. First support providesSMAVG50. Additional support provides high from 14/04/2015 @ 170. RSI is in upwardtrend and is above 50 points.
HTRA ZA - Resistance @ 178,50 (daily chart)
Technical Perspective - Region
Today we are looking @ daily DAX index. It breached resistance that was provided byhigh from 23/06/2015 @ 11635. Next resistance provides high from 26/05/2015 @11920 and psychological level @ 12000. First support provides high from 30/11/2015and SMAVG50. RSI breached red downward trend.
DAX - Support @ 11430 (daily chart)
Technical Perspective - Global
We would be sellers around 178,50
Trading Suggestion:
We would be buyers in case resistance @ 11920 gets breached
Trading Suggestion:
Technical Targets:12390… high 2015
12000… psychological level11920… high 26/05/2015
11772… last11635… high 23/06/2015
11516… SMAVG5011430… high 30/11/201510802… high 15/08/2016
Technical Targets:180,00… high 2017179,50… high 2016
176,95… last172,72… SMAVG50170,00… high 2015
IC MARKET ESPRESSO
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 6 IC.traderInterCapital.hr
Regional Equity Market; Fundamentals of Selected Companies
IC MARKET ESPRESSO
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 7 IC.traderInterCapital.hr
Regional Equity Market; Fundamentals of Selected Companies
IC MARKET ESPRESSO
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 9 IC.traderInterCapital.hr
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 10 IC.traderInterCapital.hr
Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 11
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