Commentary
Neutral semi-annual financials = a boring week
The bears dominated for another week on the Bulgarian Stock exchange although slowing the pace at which they headed for new record breaking lows. During the last two trading sessions the main index SOFIX plummeted to the triple digit level of 985 - 990 points but was subsequently brought back at the end of the sessions, thus withstanding the psychological level of 1,000 points for a third consecutive week. As a result the index fell by as little as 1.52% for the week deepening its collapse to the record breaking -42.7% year to date and -48.1% from the all-time high in October 2007.
The week was marked by the published non-consolidated financial statements for the first half of 2008, which did not confirm the darkest expectations of some of the investors for shrinking profits and revenues but neither raised any enthusiasm among the investment public. The global financial crisis and the high volatility of the commodities prices on a global scale began to affect the financial statements of part of the economic sectors represented on the Bulgarian Stock exchange, among which the most affected were obviously the extracting, processing and part of the industrial companies, whose revenues and profits were most strongly hit in the first half of the year. Typical examples of the above were the financial statements of the extracting companies Lead and Zinc Complex [5OTZ] and Kaolin [6K1], as well as the companies with major inputs different non-ferrous metals and oil, among Alcomet [6AM], Emka [57E], Orgachim [5ORG], Chugunoleene [59C] and others. All of the above reported significant worsening in their bottom lines, which for some of them was also accompanied by falling net sales as compared to the same period last year. However the pessimism from the negative financial statements was fully neutralized by the excellent results of an almost equal number of companies among which the star performers were the battery producers Monbat [5MB] and Elhim Iskra [52E], the producer of fertilizers Neochim [3NB], the machinery producers Sparky Eltos [SL9] and M+S Hydraulic [5MH], Oil & Gas Exploration & Production [4O1] and others.
One of the companies in the spotlight during the week was the producer of paints and varnishes Orgachim AD. The publishing of the semi-annual financial statements coincided with the General Shareholders’ Meeting and the Information for the release of the executive director Ivan Sokolov, who worked as a manager of Orgachim for the last seven years. The Information about the release of Mr. Sokolov was vague and the reasons – unclear. The net income in the first six months of 2008 slid by the impressive 52% y-o-y.
The report also includes:
market Trends
SOFIX (chart)
BG40 (chart)
market Statistics
| Segment | Volume (BGN) | Deals |
| Trading in Equities | 16 160 013.51 | 5 972 |
| Weekly Chng | 41.42% | 46.48% |
| Trading in Corp. Bonds | 2 640 644.30 | 15 |
| Weekly Chng | 55.25% | -59.46% |
| Traiding in REITS | 1 351 070.37 | 230 |
| Weekly Chng | 72.35% | 75.57% |
| market Capitalization: | BGN 20.09 bln / EUR 10.27* bln |
The Bulgarian Lev is pegged to the Euro at BGN 1.95583 per EUR 1.00.
Gainers & Losers*
| TOP GAINERS | Ticker | Sector | Weekly Chng |
| Petrol AD | 5PET | oil trading | + 12.75% |
| Neochim | 3NB | chemical | + 8.95% |
| Odessos Shiprepair Yard AD | 5ODE | machinery | + 3.73% |
| TOP LOSERS | |||
| Orgachim AD | 5ORG | chemical | -20.83% |
| Kremikovtzi | 4KW | metallurgy | -20.57% |
| Etropal | 5EO | medical accessories | -18.14% |
*Gainers: Among shares with turnover above BGN thnd 50; Losers : Among shares with turnover above BGN thnd 20;
Мain Economic Indicators
| 2005 | 2006 | 2007 | |
| GDP, in bln EUR | 21.88 | 25.24 | 28.9 |
| GDP, real growth | 6.2% | 6.3% | 6.2% |
| Inflation, avg. | 5.0% | 7.3 % | 8.4 % |
| Unemployment, avg. | 9.9% | 8.4 % | 6.1 % |
| Fiscal Balance, %GDP | 2.3% | 3.7 % | 2 % |
| Gross Public Debt, %GDP | 29.9% | 23.0 % | 19.0 % |
| Gross external debt, %GDP | 69.8% | 80.7% | 97.3% |
| Current Account, %GDP | -12.4% | -17.8% | -21.5% |
| FDI, %GDP | 14.4% | 23.7% | 21.4% |
| Prime interest rate | 2.04% | 2.69% | 3.93% |
East European Markets
| index | Value | Weekly Chng | YTD Chng |
| Bulgaria SOFIX | 1012.57 | -1.52% | -42.72% |
| Croatia CROBEX | 3 638.07 | 0.01% | -30.56% |
| Macedonia MIB-10 | 5 366.80 | 0.05% | -30.67% |
| Montenegro NEX20 | 19 145.00 | -2.63% | -43.97% |
| Romania BET-C | 6 029.00 | 2.95% | -38.64% |
| Russia MICEX10 | 1 492.55 | 0.37% | -20.98% |
| Serbia BELEXline | 1 481.40 | -4.10% | -36.10% |
| Turkey ISE-100 | 42 984.66 | 14.45% | -22.60% |
| Ukraine PFTS | 649.40 | 2.58% | -44.69% |
| Morgan Stanley MSCI EE (€) | 574.85 | 1.47% | -20.77% |
news of the week
Economics
- The prime interest rate rose to 5.25 % and hit a 10 year high, the Bulgarian National Bank[BNB] announced. It has grown by 0.57 percentage points since the beginning of 2008 and 1.15 p.p over the past 12 months.
- In July the total business climate indicator decreased by 0.9 p.p as compared to the previous month, which was due to the lower managers’ assessments in retail trade and service sector, according to the NSI.
- The Producer Price index [PPI] advanced by 2 % in June compared to May. On a yearly basis it registered a 14.5 % increase.
Politics
- The Bulgarian Socialist-led government expectedly survived the sixth no-confidence vote during its mandate held last Wednesday. This time the vote was over the failure of the governmen to adhere to the rules of the EU for the EU Funds absorption.
- Replacements of ministers as а result of the critical report of the European Commission are not planned, according to the leaders of the ruling coalition. The Cabinet was prepared to compensate the blocked funds from the EU SAPARD and PHARE programs with resources from the state budget surplus.
Corporate Sector
- Monbat [5MB] announced the start of the shares buyback from August 1. Up to 0.295% from the share capital or 115 380 shares shall be bought back at minimum price BGN 10.10 and maximum price BGN 15.042. This week the Board of Directors of the Bulgarian Stock exchange decided that the new 19.5 mln. shares from the capital increase of Monbat will be admitted for trade on the BSE on Wednesday, August 6.
- By the end of 2008 Bilboard [5BP] is going to invest some EUR 11.6 mln. and EUR 3.7 mln. of them will be own funds. These investments do not include the project for building new printing base in the town of Kostinbrod.
- The Commission for Protection of the Competition allowed the acquisition of 49.99% from the Bulgarian American credit Bank from Allied Irish Banks Public Limited company (AIB), Ireland. BACB also issued a new sixth emission of mortgage bonds with nominal value of EUR 35 mln. and maturity date in 2011.
- The subsidiary of Trace Group Hold [T57] PSI signed a new contract on July 8, at total value of BGN 887.49 ths. for rehabilitation of the streets in the municipality of Kazanlak.
- The Ministry of Defense signed a contract with Petrol [5PET] for refuelling. The value of the contract is BGN 827 ths.
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http://reports.aiidatapro.com/BBB/Karoll/Newsletter_2008.08.04.pdf
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Copyright: 2006 Karoll AD. All rights reserved. For further Information please contact Karoll, 57 Hristo Botev Str, 1303 Sofia, Bulgaria |
Tel. +359 2 981 13 81, fax: +359 2 986 34 66, e-mail: research@karoll.net, web site: http://www.karoll.net
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Newsletter 2008.08.04.pdf, 224 Kb
