market WRAP-UP
All indices moved down with top loser being BGREIT (-5.95% to 52.96 bps), SOFIX (-2.19% to 501.87 bps), BG40 reached 145.66 bps. (-0.38%), BGTR30 also closed negative at 366.81 bps (-1.82%). Among the top losers for the session were Central Cooperative Bank (4CF, BGN 1.27, -9.29%), Toplivo (3TV, BGN 8.29, -8.95%), Industrial Holding Bulgaria (4ID, BGN 2.85, -6.62%) and Chimimport (6C4, BGN 2.84, -5.43%). Day gainers were Euroins Insurance (5IC, BGN 3.34, +6.03 %), Odessos Shiprepair Yard (5ODE, BGN 163.95, +2.47%), Bulgarian-American credit bank (5BN, BGN 18.50, +2.04%). On REIT territory the main issues to pull down the index were Agro Finance (6AG, BGN 0.85, -25.00%), Advance Terrafund REIT (6A6, BGN 1.10, -11.93%) and Real Estate Fund Bulgaria (5BU, BGN 0.89, -8.90%).
| Sofix | BG 40 | BGREIT | BGTR30 | |
| Value | 501.87 | 145.66 | 52.96 | 366.81 |
| 1-day change (%) | -2.19 | -0.38 | -5.95 | -1.82 |
| 7-day change (%) | -16.15 | -8.46 | -7.40 | -10.71 |
| 90-day change (%) | -50.44 | -41.66 | 40.82 | -44.70 |
| 365-day change (%) | -74.06 | -76.00 | 47.04 | -63.32 |
Note: BG REIT and BG TR30 started 31 August 2007
| BSE Daily Volume (shares) | 1 158 283 |
| BSE Daily Volume (BGN) | 3 081 569 |
| Avg Daily Turnover YTD (BGN) | 10 727 093 |
| Avg Daily Turnover 12 mo. (BGN) | 17 505 538 |
Most recent macro data
| Inflation (HICP, M/M September) | 0.9% |
| Inflation (HICP, cum. 2008) | 8.0% |
| LEONIA Reference Rate | 5.19% |
| SOFIBOR /3 months/ | 7.843% |
| GDP Growth (Y/Y H1 2008) | 7.1% |
| Unemployment (September 2008) | 5.8% |
exchange rates
| Current | Change | |
| BGN/USD | 1.50044 | -0.03114 |
| BGN/EUR | 1.95583 | Fixed |
| EUR/USD | 1.3035 | 0.0265 |
Sofix/ BG 40 / BGREIT / BGTR30 (charts)
DAILY TRADING (selected stocks)
All figures in BGN (BGN/EUR rate fixed at 1.95583)
Compensatory Instruments (table)
ECONOMY AND POLITICS
Macroeconomic news and statistics
S&P decreases Bulgaria's rating
Standard&Poor's decreased the long-term and short-term credit rating of Bulgaria from BBB+ and A- 2 to BBB and A-3, respectively. The perspective for the rating is negative as a result of the growing risky factors for the country. According to S&P, Bulgaria has met the global crisis with overheating economy and high risk of shrinking incoming capital. Direct foreign investments are decreasing.
Source: Pari
Financial sector
Banking system in Sep’08
As of Sept’08 total assets of the banking system in Bulgaria reached BGN 69.3bn (up 17% YtD). Total loans of BGN 54.7bn (up 22% YtD) continued to increase at a higher rate compared to that for deposits (BGN 53.8bn, up 15% YtD). Despite the solid growth, the asset quality remained relatively sound with provisions/total loans ratio of 1.9%. The net profit for the Jan-Sept period totaled BGN 1.1bn (up 29% YoY). TTM ROaE came in at 20% (down nearly 3pp YoY).
Source: FFBH
CORPORATE news
Kaolin AD-Senovo [6K1]
Kaolin’s unconsolidated revenue growth speeds up in 9mo 2008
Kaolin 9mo 2008 unconsolidated revenues reached BGN 91.2m, 17% YoY increase. On quarterly level the increase was even more significant as sales grew at 28% YoY (BGN 34m), up from 23% YoY in Q2. Supposedly, the increase was both supplemented by hike in end-prices and growing volumes of FDG limestone and building materials sold.
Kaolin operating margins could not ease up in the Summer as fuels and transportation costs remained high during the period. Additionally, increase in operating costs and depreciation was inflicted by the large investment program of the company. That said, EBITDA margin was reported slightly below 17% compared to 21% in 9mo 2007. 9mo 2008 unconsolidated recurring EBT was BGN 8.4m compared to recurring BGN 11.1m.
9mo 2008 Kaolin capex amounted to about BGN 25m. Another BGN 13m were committed in capital increase and acquisitions. Kaolin expansion came at a cost of significant increase in leverage as the company utilized EUR 20m loan from SG Expressbank. Thus IB debt to equity reached 52% in 9mo 2008 up from 15% in end-2007.
Source: FFBH
M+S Hydraulic AD [5MH]
M+S Hydraulic margins improve in 9mo 2008
M+S Hydraulic (MCH) sales increased 12% YoY in 9mo 2008 and reached BGN 64m. Operating profitability improved in Jan-Sep 2008 as MCH investments resulted in higher efficiency. EBITDA margin over the period was 18% compared to 15% in 9mo 2007. The company net profit was BGN 6m, 57% YoY increase.
On the balance sheet assets increased 13% YtD to BGN 60m mainly influenced by almost BGN 8m capex.
Source: FFBH
Bulgarian River Shipping AD [5BR]
BRP strong performance continues in Q3 2008
Bulgarian River Shipping (BRP) reported BGN 35m in unconsolidated revenues over Jan-Sep 2008, 19% YoY growth. Despite rising fuel prices during the period, BRP managed to optimize other cost and improved EBITDA margin by almost 2pp up to 17.4%. Unconsolidated net profit followed trend and increased 34% YoY up to BGN 4.3m.
We note some significant increase in account payables as payment period doubled YoY up to 60 days over Jan-Sep 2008. The above offset deterioration in receivables collection and supported a 10% YoY growth in cash flow from operations up to BGN 3.4m.
Source: FFBH
Industrial Holding Bulgaria AD [4ID]
IHB 9mo 2008 unconsolidated net profit jumps on higher financial income
Industrial HoldingBulgaria (IHB) 9mo 2008 unconsolidated net profit grew 85% YoY up to BGN 6.4m on dividend and interest income. The substantial cash position of the holding, result from end- 2007 capital raise, generated BGN 2.4m net interest income in 9mo 2008 compared to an expense a year ago.
On the balance sheet IHB investment portfolio grew by BGN 3m as the holding increased the capital of Privat Engineering and KLVK. Both companies are related to IHB’s future sea transportation Business.
Source: FFBH
Zarneni Hrani Bulgaria AD [T43]
Zarneni Hrani’s revenues reach BGN 156m, net profit is BGN 7m due to financial income
Zarneni Hrani Bulgaria recorded revenue of BGN 156m in the first nine months of the year. Since the company is the merger of 8 companies from Chimimport structure that were merged in October 2007, and it was officially registered in November 2007 the firm did not operate in the first nine months of last year thus making YoY comparison not viable. Zarneni Hrani’s EBITDA margin for the first nine months of 2008 was 4% while for Q3 itself the firm reported an EBITDA of BGN -0.3m. The company has considerable interest payment of BGN 4m for 9mo 2008 but it manages to record a net income of BGN 7m due to an income from investments of BGN 9m. Zarneni Hrani does not disclose any Information regarding its the source of its financial income.
Source: FFBH
Monbat AD [5MB]
Monbat 9mo 2008 unconsolidated core revenues growth decelerates to 43% YoY
Monbat unconsolidated revenues grew 60% YoY up to BGN 135m in 9mo 2008. Core revenues (including sales of different types of batteries) stood at BGN 119m as growth slowed down to 43% YoY compared to 71% YoY in H1.
In Jan-Sep 2008 Monbat increased its EBITDA margin up to 20% compared to 19% over the year ago period due to slower than revenue growth in compensations and hired services costs. 9mo 2008 unconsolidated EBT margin improved 2.5pp on better operating profitability and decrease in depreciation allowances on machinery since start of 2008. Higher margins boosted ROaE which reached impressive 28% in 9mo 2008 compared to 22% in end-2007.
Monbat unconsolidated capex amounted to BGN 16m invested in capacity expansions but the work was still in progress – starter batteries capacity expansion scheduled for July 2009 and lead recycling facility expansion for end-October 2008. company LT debt reached BGN 24m in Q3 2008 but LT debt to equity remained flat YtD at 23%.
Source: FFBH
Captain Diado Nikola AD [3KN]
KDN revenues decrease 10% YoY in 9mo 2008
Kapitan Djado Nikola (KDN) revenues decreased 10% YoY to BGN 36.5m. The decline was even more significant in Q3 alone when sales dropped 21% YoY to BGN 12.6m. KDN' EBITDA margin decreased 1.5 pp to 14.3% in 9mo 2008.
As a result of the deteriorating Business in 2008 KDN lowered its capex which amounted to BGN 2.2m in 9mo 2008 compared to BGN 12.2m in 2007. Accordingly depreciation allowances declined 30% YoY to BGN 3.6m and net profit remained flat YoY but still as low as BGN 0.24m.
Source: FFBH
Albena AD [6AB]
Albena’s revenue grow 5% YoY, net income declines 4.5%
Albena recorded an unconsolidated revenue growth of 5% YoY from BGN 85m for 9mo 2007 to BGN 90m for 9mo 2008. The growth in revenue was due to a 3% increase in the number of tourists that visited the resort in the first nine months of the year and the increase in prices per bed. However, the company has reported that the average stay per tourist has decline which in turn led to a reduction in the total number of stays despite the growth in tourists. Albena’s operating margin stayed relatively constant at 43% for both the first nine months of 2007 and 2008. The 4.5% decline in net income during 9mo 2008 was due to a 17% YoY growth in depreciation expense to BGN 10.8m and 23% increase in net interest expense to BGN 6.3m. The company persisted with its investment strategy which led to 23% YOY increase in long-term debt to BGN 128m.
As a final point, in its activity report Albena’s management has stated that the full-year results are not going to meet the company’s expectations due to the extensive investment program, the increase in compensation expenses and a slowdown in bookings for September.
Source: FFBH
Doverie-Obedinen Holding AD [5DOV]
Doverie-Briko to set foot in Albania
Doverie-Briko, a subsidiary of United Holding Doverie, has plans to set foot on the Albanian market, the company announced. The company has come to an agreement with French Mr. Bricolage SA to use the trademark in Albania. Several DIY stores will be opened in big Albanian cities. Doverie-Briko has stores in Serbia and Macedonia and 10 stores in Bulgaria with floorage over 60 000sq. m and turnover of BGN 130m for 2007.
Source: Pari
Zlaten lev Holding AD [3Z3]
Zlaten Lev Holding to invest in solar station
Zlaten Lev Holding will invest BGN 1m in the construction of solar power station. The project includes 1 540 solar panels to be located on 6 000 sq. m on the roof of company-owned Novalis plant in the town of Pazardjik. The station will have capacity of 122 KW and will generate annually over 175 mWh of electricity, mainly for sale as solar energy is with preferential price. The project is entirely financed with bank credit from UniCredit Bulbank.
Source: Pari
First Investment Bank [5F4]
Restored confidence but growing expenses continued to take toll on bottom line at FIB in Q3’08
As of Sept’08, FIB’s assets totalled BGN 4.2bn (virtually unchanged YtD) on an unconsolidated basis. Loans to NFI of BGN 2.9bn increased by 4% YtD on tight lending policy. Deposits from NFI of BGN 3bn grew in the quarter after the short-lived run on in May. The net profit of BGN 35m was virtually unchanged YoY. The TTM ROE decreased to 15% compared to 23% in the year-ago period. Liquidity remained adequate with liquid assets covering 26% of liabilities.
Source: FFBH
Lomsko pivo [6L1]
Slowdown in revenue growth for Lomsko
After the 35.5%YoY increase in sales in H1 2008 Lomsko’s revenues exhibited a slowdown in growth to 24% YoY in Q3 2008, which is expected to be the strongest quarter for local breweries. Total revenues for the first nine months of the year reached BGN 7m, which implies a 26% YoY growth.
The company is having problems reigning in its costs. For the first nine months of the year operating costs have jumped 33%, outpacing the growth in sales by 7%. According to the firm’s management this increase in prices were due to the raising oil prices especially since this year Lomsko started to export to Romania and Hungary. Interest expense has also contributed to the decline in profit margin increasing by 76% YoY in first nine months of 2008. Therefore, despite the strong growth in revenues the firm’s net income stayed relative constant YoY at BGN0.9m for the period Jan –Sept.
Source: FFBH
Toplivo AD [3TV]
Net income improved in the Sept’08 quarter at Toplivo
In Q3 Toplivo’srevenues of BGN 70m decreased by 16% YoY but net income of BGN 3m improved by 60%. For the first nine months total sales reached BGN 240m (up 15% YoY) and net income was BGN 4m (up 67% YoY).
Source: FFBH
Central Cooperative Bank AD [4CF]
Deteriorating bottom-line despite strong loan portfolio growth
As of Sept’08, CCB’s assets totalled BGN 1.65bn (up 5% YtD). Loans to NFI of BGN 919m increased by 40% YtD. Deposits from NFI of BGN 1.41bn grew by 6% YtD. The net profit of BGN 10m decreased by 45% YoY.
Source: FFBH
Chimimport AD [6C4]
Chimimport unconsolidated net profit in Q3 was BGN 9.6m, up 7% YoY and down 65% QoQ
The unconsolidated report of Chimimport for the 9 months of 2008 showed a significant increase in net interest income on an annual basis (up more than 17x YoY to BGN 13.5m), but a decline on a quarterly basis (a decrease of 6% QoQ, to BGN 5.1m). However, while the booked interests in the P&L is BGN 16.9m, the interest received in the cash flow statement is only BGN 78k.
The net income from investments for the 9-month period was BGN 35m, down 30% YoY, with a small loss of BGN 25k booked in Q3.
The holding registered a growth of 160% YoY in its non-financial revenues, to BGN 11.9m, as a result of ‘other’ revenues of BGN 8m booked in Q3 08.
On the bottom line, the net profit reported was BGN 53m, up 5% YoY. The net profit for Q3 was BGN 9.6m, up 7% YoY and down 65% QoQ.
During the quarter the holding booked a long-term intra-group loan of c. BGN 122m, which represents most of the proceeds from the exchangeable bond issued recently from the subsidiary Chimimport Holland. BGN 70m of them were extended as loans in Q3.
Source: FFBH
Sopharma AD [3JR]
Sopharma unconsolidated sales up 11% YoY in 9mo 2008, net profit down 42% YoY
Sopharma reported unconsolidated revenues of BGN 135.5m for the 9mo 2008, up 11% YoY. Production sales reached BGN 121m, up 10% YoY. The sales for Q3 only were BGN 49m, up 19% YoY, vs. a growth of 7% YoY for H1 2008.
However, EBITDA was down 22% YoY to BGN 30m, after a 26% YoY rise in operating expenses for the 9-month period (mostly on the compensation and cost of hires services lines). EBITDA margin was 22% vs 31% for the same period of the last year. On a quarterly basis, however, EBITDA was up 37% QoQ, despite the fact that Q3 is usually not a strong quarter for Sopharma, and EBITDA margin reached 22% in Q3 vs. 18% for the previous quarter.
Below the EBITDAline, net financial costs rose by 50% YoY, of which net interest cost accounted for BGN 4.6m, foreign exchange losses contributed BGN 2.5m (of which BGN 1.5m booked in Q3) and net income from investments accounted for BGN 1.1m (of which BGN 1m realised in Q3).
Net profit for the period was BGN 15.1m, down 42% YoY, and net profit margin was kept at its H1 2008 level of 11%, vs 22% in 9mo 2007. On a quarterly basis the net income was up 68% YoY to BGN 5.4m, and the net profit margin reached 11% in Q3 vs. 7% in Q2.
The company’s net cash flow from operations was positive BGN 5.2m for 9mo 2008, against positive BGN 3.2m a year ago.
Source: FFBH
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Copyright: 2006 First Financial Brokerage House. All rights reserved.For further Information please contact
FFBH, 2 Enos Str., 1408 Sofia, Bulgaria, Phone: +359 2 810 64 21, fax: +359 2 810 64 01, e-mail: ffbh@ffbh.bg, web site: http://www.ffbh.bg
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BMU31-10-08.pdf, 77 Kb
