OVERVIEW
MACROECONOMICS
Registered Unemployment Rate — slight improvements in comparison to June, 12.4% recorded
EQUITIES
market comment — CROBEX lost 3.1%; share turnover amounted to HRK 159 million (HRK 30.5 block transactions)
BONDS
market comment — CROBIS added 0.1% on total turnover of HRK 328.9 million
CBS RELEASES OVERVIEW
- August 28th: Industrial Production Volume index, July 2008
- August 29th: Foreign Trade in Goods of the Republic of Croatia, July 2008
- September 5th : Retail Trade, July 2008
- September 8th: Tourism, July 2008
- September 9th: Producers’ Price indices of Industrial Products, August 2008
- Financial sector and oil prices influencing investors’ sentiment
- Lack of investors’ interest on positive results of Croatian companies
REGISTERED UNEMPLOYMENT RATE
Registered unemployment rate in Croatia in July amounted to 12.4%, representing slight improvement in comparison to June’s 12.5%. In July 2007 registered unemployment rate equaled 14%.
On an annual level, positive trends in unemployment began in 2005, when average annual rate amounted to 18%. During 2006, it decreased to 17%, while during 2007 it further dropped to 15.1%. Positive unemployment rate movements are a combined result of favorable economic conditions and more restrictive criteria in Unemployment register. Under ILO classification, during 2007 unemployment in Croatia amounted to 9.6%.
At the end of July, a total of 219,747 persons were registered as unemployed in Croatian Employment Service, which is 2,543 less (- 1.1%) than in June and 26,021 less (-10.6) than in July 2007.
62.4% of total number relates to females. On educational basis, 34.1% of unemployed persons relates to those that have a 3 years of high school, 25.5% with 4 years high school and 25.4% with only primary school finished.
Under age classification, the highest shares relates to older than 50 years. The most significant drop in unemployment rate is seen in County Krapinsko Zagorska and Varazdinska.
During July the highest increase in newly employed is registered in retail trade, hotels and restaurants.
REGISTERED UNEMPLOYMENT RATE MOVEMENTS IN Croatia (chart)
UNEMPLOYMENT RATE OF SELECTED COUNTRIES IN JULY (chart)
market COMMENT
Increasing price of oil and concerns about the future of global financial sector impacted majority of world’s capital markets, as well as domestic market, whose popular benchmark declined 3.1% on weekly basis, while stock turnover amounted to HRK 159 million out of which HRK 30,5 million relates to block transactions. The most liquid issues were integrated telecom HT (HT-R-A), oil and gas company Ina (INA-R-A) and shipping company Atlantska plovidba (ATPL-R-A) collecting HRK 22.2 million, HRK 19.3 million and HRK 14.2 million, respectively. Regional markets delivered mixed performance as Sarajevo Stock exchange index, SASX-10, and composite index of Hungarian, Czech and Polish markets, CECEEUR, gained 0.5% and 0.4%, respectively, while Macedonian MBI-10 and Serbian BELEX- 15 lost 3.7% and 2.2%, respectively.
Ina (INA-R-A) - oil and gas company dropped 2.4% on a weekly basis as Croatian Financial Services Supervisory Agency (CFSSA) announced that takeover bid submitted by Hungarian oil company Mol did not include all required documentation and was therefore sent back. Mol now has 15 more days to send a valid bid after which CFSSA will checked its validity.
Losinjska plovidba (LPLH-R-A) - shipping company added 3.6% after the company posted Q2 results showing HRK 19.1 million in net income, a 37.8% increase yoy, mainly driven on net extraordinary result, where company booked HRK 24.6 million. On operational side company delivered mixed results with EBIT dropping 16.3% while EBITDA increased by 8.3% as the company increased depreciation by 56.7%. Cumulatively, net income stands at HRK 29.4 million, giving EPS of 44.4 while the stock ended the week at HRK 370.
Luka Rijeka (LKRI-R-A) - port operator dropped 1.3% to end the week at HRK 414.5 after company posted Q2 results. Even though the sales increased by 28.5%, EBIT and net income declined by 26.9% and 16.8%, respectively, as a result of 33% yoy operating costs increase driven with payment of backward debts and redundancy costs. Q2 net income amounted to HRK 1.6 million while cumulatively it stands at HRK 4.3 million or some HRK 1.43 per share.
Magma (MGMA-R-A) - diversified retailer nosedived 15.6% on a weekly basis, after the company released Q2 consolidated results far below expectations. Even though the Co managed to increase sales by 20.9% yoy, operating expenses soared 44.5% resulting in EBIT loss of HRK 8.8 million (2007Q2: +HRK 24,7m) and EBITDA decrease of 93.3%. Bottom line stands at HRK - 11,4 million (2007Q2: +23,1 m). The biggest decline was recorded in Magma Fashion division due to drop in purchasing power impacting premium fashion brands. After a successful ipo in 2007, the company started regional expansion but due to the worsened macroeconomic situation and decline in purchasing power, it announced that 2 outlets in Serbia were closed while other 2 are waiting to be shut-down soon. At the beginning of Q2, the company diversified its retail business by starting to develop retail chain focused on Home Improvement sector and has opened 9 Magma Home stores since then. The company targets fast growing segments but will also redirect some of the risks associated with Premium Fashion brands into the new segments.
Dalekovod (DLKV-R-A) - media speculations on new contracts worth HRK 370 million did not help heavy constructor and power trunk producer as it declined 2.4%. Newspapers are speculating that Dalekovod won a contract for electrification and equipping of 2nd tube of Mala Kapela and Sveti Rok tunnels.
Atlantic Grupa (ATGR-R-A) - health care and consumer goods producer & distributor posted quarterly results in line with our expectations. company managed to increase sales by 19% whereas operating costs increased by 17% giving significant increases in operational side with EBITDA soaring 42%, EBIT by 54% while net income rocketed 58%. After Atlantic Grupa completed ipo in the last quarter of 2007, the Co was active in M&A area during first three months as it acquired a total of 33 drug stores and consolidated them into the largest domestic private pharmacy chain with revenues of some HRK 250 million (14.7% of 2007 sales). Atlantic Group also signed a distribution contract with TDR (a subsidiary of Adris Group), the largest domestic player in cigarettes market holding some 80% market share, to distribute its brands in HoReCa channel. ATGR ended the week at HRK 709.98 which is still 24.1% below the ipo price of HRK 935.
Viro (VIRO-R-A) - sugar producer did not come into the investors focus as its price declined 4.5% even though the company submitted an official bid worth HRK 279 million for 38% stake in government owned sugar producer Sladorana. This amount also includes HRK 75 million which is planned to be spent on further recapitalization of Sladorana through which Viro would increase its ownership to 51.7% of the company.
CROBEX index - Zagreb Stock exchange -3,1%
change in 2008. -32,4%
CROBEX index - Zagreb Stock exchange (chart)
WEEKLY CHANGES (AVERAGE PRICE) (chart)
The most liquid issues:
- HT
- INA
- Atlantska plovidba
World’s indices weekly movement:
- Dow Jones –0.3%
- S&P - 0.5%
- Nasdaq -1.5%
- FTSE +0.9%
- DAX –1.6%
- Nikkei –2.7%
market MULTIPLES -SHARES (table)
FUNDAMENTALS - BONDS (Government bonds, Municipal bonds, Corporate bonds, Government eurobonds) (tables)
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FIMA weekly report 2008 34.pdf, 270 Kb
