1Q08 financial results; sales up by 31% y/y
The Croatian ICT company announced 1Q08 results and reported a 31% y/y growth in sales to HRK 381mn. This strong y/y growth is mostly a result of the very low base in 1Q07 (the weakest quarter in the last few years). Despite strong y/y growth in sales, net profit dropped by 35% y/y due to two factors: firstly, 52% y/y increase in COGS and secondly, a total of HRK 21.5mn in forex losses (around 5.6% in sales). Decline in profit items brought further sliding of both net profit margin and EBIT margin, while EDITDA margin remained almost unchanged at 13.7%. Dollar depreciation still remains a heavy burden to the bottom line, which deflated the net profit by HRK 21.5mn. The company performed well in most of its markets, posting almost 50% y/y growth in the CIS market, 22% y/y growth on the domestic market and 6.2% y/y growth on the internal market. Nevertheless, one should bare in mind the low base in 1Q07. Regional market growth is still mostly driven by Kosovo, which accounts for 56% of regional sales, while the downturn in Bosnia- Herzegovina and Montenegro is expected to reverse in the second half of the year. We find this result mostly in line with our expectations although we did not expect to see such large forex loses. A positive surprise is the sales growth in CIS markets, although overall revenues compared to average quarterly sales has deteriorated.
The major price mover in the upcoming period will continue to be dividend payment (HRK 270 per share, current DY: ~10%), which should be approved on AGM scheduled for May 27, where we do not expect any objections to this payout. We stick with our hold recommendation and suggest holding the stock until we find a strong base which will point out if company will get off the track of margins FY2008 expectations, however this quarter is not a good signal on a direction where company will go.
| share price(HRK) | 2.790,00 |
| Number of shares(mn) | 1,332 |
| market cap.(HRK/EUR mn) | 3,715.3 / 511.8 |
| Enterprise value (HRK/EUR mn) | 3,443.0 / 474.3 |
| Avrg. daily turnover(HRK/EURmn) | 4.39 / 0.60 |
| Reuters | ERNT.ZA |
| Bloomberg | ERNTRA CZ |
| Target price(HRK) | 2.817,00 |
| Ex - dividend date | - |
| index weight | 6.38% |
| Free float: | 32,18% |
| Shareholders: | Telefonaktiebolaget LM Ericsson (49.07%) |
| Raiffeisen mandatory pension fund (4.36%) | |
| Homepage: | http://www.ericsson.com/hr |
| HRK mn | 2005 | 2006 | 2007 | 1Q08 |
| Net sales | 1,624.52 | 1,634.14 | 1,781.49 | 1,871.08 |
| EBITDA | 252.03 | 276.13 | 240.17 | 236.01 |
| EBIT | 198.12 | 202.85 | 156.48 | 152.08 |
| Net profit | 235.69 | 233.77 | 199.80 | 187.41 |
| EPS (HRK) | 176.99 | 175.55 | 150.04 | 140.74 |
| CEPS (HRK) | 217.47 | 230.59 | 212.88 | 203.76 |
| BVPS (HRK) | 1,119.33 | 1,180.86 | 987.97 | 996.55 |
| EV/EBITDA | 11.82 | 10.69 | 13.83 | 13.50 |
| EV/EBIT | 15.04 | 14.55 | 21.23 | 20.95 |
| P/E | 15.25 | 15.37 | 17.99 | 1.70 |
| P/B | 2.41 | 2.29 | 2.73 | 19.18 |
| P/S | 2.21 | 2.20 | 2.02 | 2.71 |
| P/CE | 12.41 | 11.70 | 12.68 | 1.92 |
| EBIT margin | 12.20% | 12.41% | 8.78% | 8.13% |
| EBITDA margin | 15.51% | 16.90% | 13.48% | 12.61% |
| Net margin | 14.51% | 14.31% | 11.22% | 10.02% |
| ROA | 13.17% | 12.16% | 10.87% | 10.95% |
| ROE | 17.03% | 15.26% | 13.84% | 14.12% |
* finantial ratio ns are calculated based on one-ye ar trailing fina ncial repor ts
| Performance | 12M | 6M | 3M | 1M |
| in HRK | -29.1% | -22.9% | -6.6% | 0.0% |
| in EUR | 0.0% | -22.0% | -6.3% | -0.1% |
52 weeks price and turnover performance (chart)
1Q08 Profit and loss account (tables)
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To view the original document, please click on the link below:
http://reports.aiidatapro.com/CBB/ErsteSecurities/Flash_Note_Ericsson_Nikola_Tesla_Q1_2008.pdf
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Copyright: Erste Securities Zagreb, Croatian Equity Daily, Thursday, May 31, 2007Sales : Zeljka Kajkut-Brni Phone: +385 62 37 2811 kajkutz@erstebank.comDamir Eror Phone: +385 62 37 2813erord@erstebank.comResearch: Damir Cukman Phone: +385 62 37 2820 cukmand@erstebank.comDavor Spoljar Phone: +385 62 37 2825 dspoljar@erstebank.com
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Flash Note Ericsson Nikola Tesla Q1 2008.pdf, 82 Kb
