market WRAP-UP
On Wednesday, despite 3 out of the 4 indices finished the day on positive ground: SOFIX (488 bps, +1.6%), BG40 (146 bps, +0.8%) and BGTR30 366 bps (+2.3%) advanced, while BGREIT lost 2.1% to 54 bps. The daily gainer was Sparky Eltos (SL9, BGN 3.89, +18.8%) which, however, registered this move on very small daily turnover, followed by Lead and Zink Complex (5OTZ, BGN 12.40, +12.7%), M+S Hydraulic (5MH, BGN 5.50, +7.8%) and Bulgarian American credit Bank (5BN, BGN 19.999, +5.3%). Among the top losers of the session were Holding Roads (6H2, BGN 4.60, -6.1%) and Orgahim (5ORG, BGN 94.00, -8.7%), with the latter releasing somewhat disappointing results. On REIT territory, the main stock to pull down the index was Real Estate Fund Bulgaria (5BU, BGN 0.82, -9.0%) where more than 512k shares changed hands.
| Sofix | BG 40 | BGREIT | BGTR30 | |
| Value | 488.19 | 146.49 | 53.98 | 366.11 |
| 1-day change (%) | 1.64 | 0.77 | -2.10 | 2.29 |
| 7-day change (%) | -4.86 | 0.18 | -4.14 | -2.01 |
| 90-day change (%) | -51.37 | -42.44 | -39.53 | -44.68 |
| 365-day change (%) | -73.64 | -73.79 | -46.02 | -63.39 |
Note: BG REIT and BG TR30 started 31 August 2007
| BSE Daily Volume | 1 394 380 |
| BSE Daily Turnover | 3 472 404 |
| Average Daily Turnover YTD | 10 590 755 |
| Average Daily Turnover 12 months | 16 969 218 |
Most recent macro data
| Inflation (HICP, M/M September) | 0.9% |
| Inflation (HICP, cum. 2008) | 8.0% |
| LEONIA Reference Rate | 5.65% |
| SOFIBOR /3 months/ | 7.859% |
| GDP Growth (Y/Y H1 2008) | 7.1% |
| Unemployment (September 2008) | 5.8% |
exchange rates
| Current | Change | |
| BGN/USD | 1.51968 | -0.00593 |
| BGN/EUR | 1.95583 | Fixed |
| EUR/USD | 1.287 | 0.005 |
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
Budget surplus reached BGN 5bn at the end of September 2008
The fiscal reserve as of end September totaled BGN 12bn, announced the Ministry of Finance. Revenues and grants under the consolidated fiscal program for January-September stood at BGN 20.9bn, up 20.3% YoY.
Tax revenues were BGN 16.7bn, with revenues from direct taxes at BGN 3.9bn, up by 21.4% YoY. The highest growth was registered by revenues from corporate taxes. Indirect taxes amounted to BGN 8.9bn, up 20.3% YoY. Excise revenues grew by 21% YoY. Revenues from social security taxes and health contributions were BGN 3.9bn. Non-tax revenues amounted to BGN 3.1bn, up by 19.2% YoY.
Grants, which come mainly from the structural and cohesion fund of the EU, from the pre-accession instruments and the European agricultural fund stood at BGN 1bn.
Expenses under the consolidated budget were BGN 15.9bn including BGN 479m fee payment to the EU budget.
Consolidated budget surplus reached BGN 4.98bn at the end of September 2008.
Source: Investor.bg; FFBH
IT
IT market poised to reach EUR 3.8bn in 2008
The IT sector generated revenues of EUR 3.3bn in 2007 and is headed to reach revenues of EUR 3.8bn in 2008, according to data released by the Bulgarian Association of Information Technology and Communications.
Source: Dnevnik;FFBH
CORPORATE news
Orgachim AD [5ORG]
Slowing revenues growth in Q3
Orgachim reported a 15% YoY increase in its unconsolidated revenues for the 9mo of 2008 (which are generally not much different from the consolidated), to BGN 110m, with production sales rising by 18% YoY, to BGN 102m. However, in Q3 the growth in production sales decelerated to 12% YoY (to BGN 40m), and in Q3 revenues rose by only 2% quarter-on-quarter (to BGN 42.5m), despite the fact that Q3 is traditionally the strongest period for the company.
Materials costs continued to rise in Q3, at a slower pace YoY than in H1, but still faster than revenues. Compensation expenses also kept a steadily growing trend, increasing by 11% QoQ. Adjusted for the one-off expenses from asset impairment of BGN 1.3m booked in Q3 (mostly on revaluation of anhydrates on stock, whose price dropped significantly with the drop in the price in oil), EBITDA for the 9mo came at BGN 11.4m, down 11% YoY. EBITDA margin was 10.3% (adj.), below the 13.4% level a year ago but slightly above the 10% level registered in H1 2008, as Q3 saw some improvement in margins (adjusted for the revaluations). On unadjusted basis EBITDA stood at BGN 10.1m, down 21% YoY.
Net income was reported at BGN 4.4m, down 57% YoY on unadjusted basis. After adjustments the profit would reach BGN 5.7m, down 45% YoY, and net profit margin would be 5.2% which is a significant deterioration on the 11% for the 9mo 2007 but an improvement on the 4.5% for H1 2008. The company reported positive net cash flow from operations of BGN 3.6m for the first three quarters of the year, vs. BGN 5.5m booked for the same period of the last year. Orgachim receivables and inventories increased by more than payables YtD and non-cash working capital expanded by a further BGN 2.5m, to BGN 24.3m at end-September.
The leverage improved slightly, as interest-bearing debt to assets fell from 23% at end-2007 to 20% at end-September (IB debt was BGN 24m at the end of the period). The interest coverage decreased from 6x to 4x on the face of it, but on an adjusted basis actually improved to 7x.
Source: FFBH
Sopharma AD [3JR]
Sopharma production sales up 6% in October
The production sales of Sopharma went up 6% YoY in October compared to 46% YoY increase in September, as a result of planned price increases on main export markets from 1 October. Export sales declined by 2% YoY in October and local sales increased by 24% YoY. sales for the first 10 months of 2008 rose by 9% YoY (10% YoY growth for the first nine months of the year), with exports increasing 22% YoY. According to the press release, there was no growth in local market sales for the period due to the reconstruction of the company’s ampoule plant in the beginning of the year and the rules for price formation in the country.
Source: x3news; FFBH
Zarneni Hrani Bulgaria AD [T43]
Zarneni Hrani Bulgaria opens officially its new biodiesel factory
Zarneni Hrani Bulgaria opened its new EUR 15m biofuel plant in the town of Provadia. The plant can process sunflower, soya and rape seeds. Storage facilities for the production output are situated in the vicinity of the plant, as is a laboratory, which has the capacity to analyze 22 out of the 24 indicators of the biodiesel’s quality. Loading of production will be fully automated, with capacity of loading up to three cisterns at a time. A by-product of the production will be glycerin, which could be used in other manufacturing processes.
The unit’s annual output of up to 100,000 tonnes will initially be shipped to Romania, Spain, Italy, Austria and Israel, said executive director Georgi Kostov.
No biofuels are available on the Bulgarian market although local law requires mineral fuel producers and importers to include up to 5% of bio components.
Source: Dnevnik; Investor.bg; FFBH
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