OVERVIEW
MACROECONOMICS
- Consumer Price indices — oil and food, as well as electricity price increases resulted in record inflation of 8.4%
- Building Permits Issued — improvements in comparison to May, annual and cumulative date reflect deterioration in construction operations
EQUITIES
- market comment — CROBEX increased 0.6%; regular share turnover in shorter week amounted to HRK 104.2 million
BONDS
- market comment — CROBIS added 0.3% on total turnover of HRK 60.7 million
CBS RELEASES OVERVIEW
- August 22nd: Average Net and Gross Earnings, June 2008
- August 22nd: Registered Unemployment Rate, July 2008
- August 28th: Industrial Production Volume index, July 2008
- August 29th: Foreign Trade in Goods of the Republic of Croatia, July 2008
- Two weeks’ period for verification of MOL’s takeover bid began
- Lack of reaction on financial results
- Oil prices on $115 per barrel level
CONSUMER PRICE indices
Inflation rate in Croatia hit the record level again. Prices in July were 8.4% higher yoy, with minimal increase of 0.1% recorded in one month period. In comparison to December 2007, the growth amounts to 3.9%, pushing average inflation in 2008 to 6.5%.
Food, main inflation generator in combination with oil, recorded 14.7% yoy increase, with positive movements on monthly level, as prices dropped 0.8% in that period. The highest increase is recorded in prices of oils and fat and fruit, of 33.2% and 21.6%, respectively. On a monthly level, significant increase is seen in prices of fish and meet, 2.3% and 1.1%, respectively. Due to seasonal factors, vegetables and fruits recorded price drop of cca 10% mom.
Due to increase in electricity prices in July, a very sharp 16.1% mom growth is recorded, contributing to record inflation rate. Oil, another inflation generator in Croatia and globally, still has negative impact. In a month period, fuels and lubricants for personal transport equipment grew 1.3%, which is 22.5% yoy increase. As oil prices record decrease on global market from mid of July, we anticipate that, after long time, oil could stop being main inflation generator.
Under selected groups classification, inflation without energy would equal to 7.1%, and if we would to deduct food as well, it would be 3.6%. Only energy and processed food recorded increases on monthly level.
With annual growth of 8.4%, Croatia is bellow Central and East Europe average of 9.6% in July, extremes excluded. Eurozone remained 4% inflation rate.
Data on food and oil prices, mostly crops, leave space for optimism. 16% better crop yield yoy is expected in Europe, and corn prices already recorded 36% drop in comparison with record level in June.
As inflation began to grow in August last year, we expect that, in the case of further positive movements in oil and food prices, following months should bring us a trend slow down.
CPI OF SELECTED COUNTRIES IN JULY (chart)
BUILDING PERMITS ISSUED
Under latest Croatian Bureau of Statistic data, building permits lack positive movements as well. A total of 989 permits have been issued in June, 9.3% less if compared to the same period of previous year, however 8.8% better in comparison to May. 88% of total permits relate to buildings and 12% to civil engineering works.
Value of works totaled to HRK 2.1 billion, representing high 29.7% yoy lower amount. Value of works in buildings segment is 31.8% yoy lower, while civil engineering recorded 16.6 yoy worse result.
In comparison to May, value of work per permit increased to HRK 2 bn (+11.5%) for buildings and is 23.5% down for civil engineering equaling to HRK 2.9 bn.
Cumulatively, the number of permits and value of work in the first six months of 2008 are 19.6% and 11% lower, respectively. The value of work totaled to HRK 12.9 bn. Cumulative value drop of 11.3% to HRK 9.3 bn in buildings segment, and 10.3% decrease in civil engineering resulted in drop of total value of work . Under building permits issued, 1,420 dwellings with average area of 88.7 sqm is allowed.
NUMBER OF BUILDING PERMITS ISSUED (chart)
market COMMENT
During last week, companies listed on Zagreb Stock exchange continued to post consolidated H1 financial statements, while oil and gas company Ina stayed in investors' focus as official takeover bid by Hungarian Mol is awaited. Popular benchmark gained 0.6% with stock turnover amounting to HRK 104.2 million. The most liquid issues beside Ina, which collected HRK 35.8 million in turnover, were integrated telecom HT and shipping company Atlantska plovidba, collecting HRK 15.5 million and HRK 10.3 million in turnover, respectively. Apart from Serbian market whose index BELEX15 gained 2%, all other indices suffered a decline with both Macedonian MBI-10 and Sarajevo’s SASX-10 losing 1.8%, while composite index of Hungarian, Czech and Polish markets, CECEEUR, lost 1%.
Ina (INA-R-A) - oil and gas company posted excellent H1 results showing 168.9% increase of net income as a result of HRK 391 million better net financial result, 21% increase of sales, 31.7% increase of EBITDA, and 42% increase of EBIT. Net income amounted to HRK 796 million giving H1 EPS of HRK 79.6. During the last week, Ina's competitor, Russian company Lukoil, announced it plans to invest some HRK 80 million into the rebranding, reconstruction and expansion of gas stations which they recently acquired. Lukoil currently owns 10 gas stations in Croatia and plans to open 6 new ones until the end of the year. During last week Ina’s share lost 0.2%.
Tehnika (THNK-R-A) - construction company posted H1 results showing 45.4% growth of sales followed by 79.1% increase in EBIT, 46.8% increase in EBITDA and 29.4% increase in Net Income which totaled to HRK 17 million giving H1 EPS of 89.7. Tehnika's share ended the week at HRK 4.897.
Atlantska plovidba (ATPL-R-A) - Dubrovnik based shipping company released excellent Q2 results, with almost 3 times greater net income figure in the H108. The result is partly due to sale of a vessel, but also due to increase of sales, mainly foreign (27% up) and slight decrease of expenses which resulted in 237.5% growth of EBIT, and 159.2% growth of EBITDA.
Adris Group (ADRS-R-A, ADRS-P-A) - tobacco & tourism company posted H1 results showing 29.6% increase in EBIT, and 22.6% increase in EBITDA. Net income declined 2.8% as a result of a drop of net financial result by 77.9%, and it amounted to HRK 294.3 million giving H1 EPS of HRK 18.4. During the Q2 the company repaid short term debt (some HRK 500 million) and increased long term assets by HRK 268 million. These actions resulted in a decrease of short term financial assets by HRK 740 million which currently stand at HRK 1.5 bn or some HRK 94 per share. Preferred Adris share ended the week at HRK 395.
Tankerska plovidba (TNPLR- A) - Zadar based shipping company posted H1 result. company managed to improve the profitability despite 3.6% decline in sales as a result of 58% (HRK 26.3 million) decrease of other sales. Due to the 8% decrease of operating expenses, with raw material costs and depreciation being decreased 6.9% and 6.8% respectively, EBIT and EBITDA increased 5.9% and 1.7%, respectively. Corresponsive margins also increased with EBIT margin gaining 310 bps while EBITDA margin increased by 260 bps. Bottom line increased 4.1% to HRK 156.9 million giving H1 EPS of HRK 250.5. During last week TNPL share gained 0.9% to end at HRK 3,430.
Dioki (DIOK-R-A) - polymer producer dropped 10.4% on a weekly basis after the company posted H1 results showing HRK 8.5 million loss. Even though Dioki managed to increase sales by 16%, increase of operating costs by 17.9% offset the sales efforts. The company also scheduled a GA for 8th of September with one of the proposals being a capital decrease in the amount of HRK 1.05 bn with goal of covering losses from prior years. This action would decrease stock’s par value from HRK 500 to HRK 240.
Jadroplov (JDPL-R-A) - Split based shipping company published H1 financial statements. The company managed to increase sales by 26.6% but the costs increased 51% as a result of significant increase in depreciation of 98.8% (from HRK 36.5 million to HRK 72.5 million) as the company revaluated their ships to reflect market price. Due to the depreciation increase, EBIT dropped 42% while EBITDA increased by 22.8%. Beside significant jump of costs, Jadroplov’s bottom line was also impacted by deteriorated net financial result and during H1 the company earned HRK 4.3 million (2007H1: 35.8 million).
CROBEX index - Zagreb Stock exchange 0,6%
change in 2008. -30,3%
CROBEX index - Zagreb Stock exchange (chart)
Mostly positive financial results of Croatian Co in H1
World’s indices weekly movement:
- Dow Jones –0.6%
- S&P +0.2%
- Nasdaq +1.6%
- FTSE –0.6%
- DAX –1.8%
- Nikkei –1.1%
market MULTIPLES -SHARES (table)
FUNDAMENTALS - BONDS (Government bonds, Municipal bonds, Corporate bonds, Government eurobonds) (tables)
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FIMA weekly report 2008 33.pdf, 238 Kb
