market WRAP-UP
2007 preliminary consolidated financial reports slightly increased the value of blue chips in the end of last week which moved the indices up as SOFIX closed at 1 429.56 bps (+1.2% WoW) while BG40 added 1.1% WoW to 410.02 bps. Top gainer was Bulgarian American credit Bank (BACB) which rebounded following the news for a preliminary agreement for the sale of 49.99% stake at BGN 67 a share (more on p.5) and the bank hit BGN 72.92 (+10% WoW). On the other side Petrol (PET) leaded the week losers as its shares dropped by 26.60% WoW to BGN 5.18 without any particular reason. Despite the small positive wave the volumes remained quite low which lead us to the conclusion that bigger investors still restrain from trading.
SOFIX (one month) (chart)
BG40 (one month) (chart)
| SOFIX | BG40 | |
| 1-wk change | 1.2% | 1.1% |
| 1-m change | 4.8% | 1.3% |
| 3-m change | 16.4% | 22.4% |
| 6-m change | 10.3% | -1.3% |
| Year-to-date | 17.7% | 20.6% |
| 12-m change | 9.7% | 67.5% |
| Period | Week 9 |
| Weekly volume (No of securities) | 4 180 334 |
| Weekly turnover (BGN) | 31 504 401 |
| Average weekly turnover YTD (BGN) | 70 344 915 |
Top Gainers*
| Bulgarian American credit Bank [BACB] | 10.7% |
| Monbat [MONBAT] | 8.6% |
| Shiprepair Yard Odessos [ODES] | 7.3% |
Top Losers*
| Petrol [PET] | -26.6% |
| Fazerles [FZLES] | -4.8% |
| Alcomet [ALUM] | -4.8% |
* from our list of selected stocks. For companies included, see table on p.3
news HIGHLIGHTS
- Gross external debt reached €27bn (94.6% of GDP) in end-2007, up 34.5% YoY
- Monetary aggregate M3 reached €21.3bn at 2007, up 30.9% YoY
- 2007 advertisement market at €243m, up 28% YoY
- Electricity exports ban lifted from March 1
- KG Maritime Shipping filed a BGN 440m bid for a 70%stake in NMB; if approved, it will invest BGN 780m in the national fleet over the next 10 years
- Kremikovtzi [KREM] will increases minimum salary by 10% from March 1
- Monbat [MONBAT] forecasts sales of €26.6m and EBT of €5.2m for Q1 2008
- Zaharni Zavodi [ZAHZA] to invest €5.1m in eco projects until end 2009
- Mekom ipo to take place on March 7, thecompany decreased minimum subscription target to 2.5m shares
- Investbank ipo prospectus for offering of 10m new shares at BGN 5.90 – BGN 7.20/share approved by FSC
- Security system maker Teletek Group to list in late 2008 or early 2009
Q4 CONSOLIDATED PRELIMINARY FINANCIAL RESULTS
Chimimport [CHIM]
Chimimport’s 2007 results reveal strong top line growth
Chimimport reported operating revenues of €384.7m in 2007, up 84% YoY; on QoQ basis the jump was even more impressive – 2.6x increase to €177.8m. This hefty improvement was basically a result of the consolidation of Bulgaria Air, which contributed €102.3m to the annual revenues of the holding. If we add to the operating income of the group also the income from operations with financial instruments – €101.2m stemming mainly from the balance sheets of Central Cooperative Bank, Armeetz Insurance, CCB Sila Pension Insurance company and the parent company– we reach at revenues of €486.1m for 2007, twice the 2006 figure. The net profit of the Holding for 2007 reached €61.4m, up 187% YoY. For Q4 2007 only the profit was €15.8m, which is 7.3% more than in Q3, but €4.9m less than in Q4 2006. Source: FFBH
Synergon Holding [PETHL]
Synergon Holding reports net income at €4m
PETHL posted preliminary consolidated results for 2007, showing again a restatement for 2006 figures. As a result, 2006 net income now stands at €4m. As expected, the holding reported weak 2007 revenues of €181m (virtually unchanged YoY). All companies within the group contributed to the disappointing topline performance. EBITDA margin continued to decrease for fourth consecutive year reaching 7.90% in 2007 (down 9 bp YoY). On a recurring basis (i.e. excluding €1.9m income from investments), net profit came in at nearly €4m.
Inventory levels continued to rise significantly, albeit flat YoY sales. Property nearly doubled YoY to €52m last year. The new plots as well as existing properties will be used for the construction of multifunctional Business buildings, spa complexes and logistics centers. Leverage remained unchanged at the end of 2007 with IB debt-to-equity ratio of 27%. Source: FFBH
Albena Invest Holding [ALBHL]
Albena Invest Holding 2007 profit at €5.1m
Albena Invest Holding's revenues decreased from €8.6m in 2006 to €8m in 2007. The company’s 2007 profit stands at €5.1m, up 97% YoY, boosted by the sale of ALBHL stake in Neochim – 2007 financial gains from investments were €5.1m (3.2x YoY increase). Source: Profit.bg; FFBH
Bulgarian Holding company [BHC]
Bulgarian Holding company net income at €3.3m
2007 consolidated revenues of Bulgarian Holding company plummeted by 38% YoY to €7.4m on the sale of the industrial company “Vamo” in January 2007. The improvement of the bottom-line (+316% YoY to €3.3m) is due to the reported €4.8m profit of its associated holding company Bulgarian Industrial and Trade Corporation. Source: FFBH
Dobrudja Holding [DOBHL]
Dobrudja Holding reports profit of €1.4m for 2007
DOBHL netted revenues of €62k, €15k lower compared to 2006. However net income soared to €1.4m from a loss of €30k in 2006, due to a €1.4m income realized from financial activities. In the notes to the financial statements the company disclosed that at end year it has sold its stake in three of its subsidiaries namely – Technostroy Engineering AD, Federal Security Service Ltd and Enterprise of Financial and Accounting Tracking, all of them located in the city of Dobrich. Source: Investor.bg; FFBH
Bulgarian Telecommunications company [BTC]
BTC 2007 audited consolidated profit down 12% YoY
BTC reported consolidated revenuesof €522m in 2007, 2% up YoY. However net profit decreased to €59.4m in 2007 from €67.6 a year ago. Main reasons for the decrease were BTC large capital expenditure (14.5% YoY growth in PP&E and intangibles to €900m) and increase in long term debt (25.6% YoY increase in IB debt to €315.5m). As a result depreciation increased 13% YoY to €97.7 while net interest expenses grew 83% YoY to €20m.On balance sheet IB debt to equity increased to 56% in 2007 up from 43% in 2006. Source: Dnevnik
Katex [KTEX]
Katex profit up to €7.2m as a result of BRIB stock sale
The revenues of textile manufacturer Katex reached €16.4m in 2007, as the fractional drop in sales was more than offset by the near triple growth in financial revenues, which topped €8.2m. Just over €7.7m of the financial income was generated by the sale of 740 000 BRIB shares. Net income rose nearly 5 times to €7.2m. Source: Dnevnik
Enemona [ENM]
Enemona profit increased 2.3 times to €5.8m
ENM consolidated revenues increased by47% YoY to €45.8 in 2007, from €16m for 2006. Profit jumped to €5.8m from €2.5m for 2006, 133% YoY increase. On the balance sheet PP&E reached €20.9m as of end 2007, up from €9.2m at end 2006. Investor.bg; FFBH
Bulgarian River Shipping [BRP]
Bulgarian River Shipping profit at €2m
BRP’s revenues have increased by 33% YoY to €23m in 2007. The company booked net income of €2m for 2007, up by 34.5% YoY from BGN €1.5m in 2006. Source: Dnevnik
Golden Sands [ZLP]
Golden Sands reported loss of €2.3m for 2007
ZLP reported consolidated revenues of€26.4 for 2007, up 22% YoY from €21.6m in 2006. An increase in other operating expenses which stood at €6.6m however pushed the company into the red leading to a loss of €2.3m for 2007 against a profit of €716k for 2006. Source: Investor.bg; FFBH
Stara Planina Hold [CENHL]
CENHL boosts 2007 net income to €4.3m, up 3.7x YoY Stara Planina Hold booked €48.8m sales in 2007, 32% higher than 2006. Operating expenses also increased to €44m in 2007 up from €34m. As a result of improved cost efficiency EBITDA grew 68% YoY to €4.8m. CENHL 2007 consolidated net profit reached €4.3m up 3.7x YoY. Except on the good operating performance profit was boosted by €1.3m financial gains from instruments which came from the sale of rights of Hydraulic elements and Systems AD [HES], the sale of 100% of the capital of the subsidiary Haidushki Poliani Ltd. and the disposal of shares of Vamo AD. Source: Investor.bg; FFBH
Benchmark Fund Estates [BMREIT]
BMREIT with a profit of €7.1m for 2007
For 2007 BenchMark Fund Estates REIT has realized a net income of €7.1m, which after corrections imposed by the Bulgarian legisaltion declines to a distributable profit of €5.4m. According to law BMREIT has to distribute dividends for at least 90% of the distributable profit, which derives a minimum compulsory dividend of €4.8m for 2007. Source: Investor.bg; FFBH
First Investment Bank [FIB]
First Investment Bank's consolidated profit grew by 77% to €26.1m in 2007
First Investment Bank's consolidated net profit surged 77% last year to €26.1m. The solid improvement was a result of both strong income growth and continuing operating efficiency improvement. Net interest income reached €67.5m (up 55% YoY). Total operating income was €100m (up 48% YoY).The administrative expenses/total operating revenues ratio stood at 55% (down 8pp YoY). NIM improved by 51bp YoY to 4.55%.In 2007, total assets came at €2.15m, which was €539m (33%) above the preceding year. Loans to nonfinancial institutions grew by 62% YoY to €1.42bn in 2007. As a result, the loans-to-assets ratio improved to 66% from 54% at end-2006. Asset quality continued to be sound with provisions-to-gross loans ratio of 2.3% at end-2007.Deposits to NFI were €1.27bn (up 49% YoY). Liabilities evidenced by paper were €633m (up 10% YoY). FIB's capital adequacy ratio was 12.98% on a consolidated basis as of end-2007. Source: FFBH
Kaolin [KAO]
Strong consolidated revenues growth in 2007 but slow ipo proceeds utilization
Kaolin recorded strong 30.5% YoYgrowth in consolidated revenues in 2007 up to €60.1m. The growth was supported by both increased exports and acquisition of new companies. EBITDA posted 24.3% YoY increase to €12.7m in 2007. The net profit almost doubled in 2007 to €9.3m but it was largely influenced by €1.3m sale of stake in a former subsidiary and €1m returned deposit from the privatization Agency. Positive effect on net profit was felt after the repayment of about €15.3m short term debt with the proceeds from April 2007 ipo. On the balance sheet assets increased 50% YoY in 2007 to €78.7m. The significant change came after €15.3m increase in cash to €16.9m as Kaolin has not utilized yet the proceeds from the ipo. In 2007 there was a major improvement also in receivables as receivables collection period dropped to 108 days from 135 days in 2006. Source: FFBH
Billboard [BOARD]
Billboard’s net profit 2.2 times above forecasts
Billboard recorded strong 55.7% YoY growth in 2007 consolidated revenues up to €13.5m against €8.7m in 2006. 2007 EBITDA reached €6m, exceeding our forecast by 38%, while net consolidated profit rose to €2.6m outperforming our €1.2m annual forecast by 118%. Due to the rise in sales, EBITDA showed 101.4% YoY increase, reaching €6m in consolidated terms versus €4.6m on unconsolidated basis. EBITDA margin marked a considerable increase from 34.3% to 44.3% YoY. Net profit grew almost 3-fold YoY to €2.6m, while it was €2.4m on unconsolidated basis. For the last calendar year Billboard increased its net profit margin to 19.6%, up from 10.2% in 2006. Source: FFBH
Alcomet [ALUM]
Alcomet’s 2007 consolidated profit down 12.8% YoY
Alcomet’s revenues increased by 17.1% YoY - from€109.9m in 2006 to €128.8 in 2007. The company reported a 12.8% decline in earnings to €2.1m for 2007, compared to €2.4m for 2006. Source: Dnevnik
Neochim [NEOH]
Neochim's sales up by €1.9m
Neochim booked €96.8m sales for 2007, an increase of €1.9m compared to 2006. The company’s consolidated net profit amounts to €1.7m in 2007, compared to €1.6m booked for 2006. Source: Pari
CBA Asset management [CBAAMG]
CBA Asset management's profit at €716k
CBA Asset management's revenues were €22.9m in 2007. The company’s 2007 consolidated profit stood at €716k. Source: Profit.bg
news IN THE SPOTLIGHT
Financial news
Business loans at €11.7bn in 2007
The value of Business loans stood at €11.7bn in 2007, up from €6.8bn in 2006. Commercial and repair businesses borrowed a total of €4.1bn or just over 35% of total Business loans. The processing industry was second with €2.5bn, 21% of total Business loans, followed by construction (12%), realty (10%) and hospitality and restaurants (6%). Source: Dnevnik
Financial news
Interest rates on deposits going up
The interest rates on bank deposits are going up, while the interest rates on mortgage loans are declining, the latest data of the BNB show. The cost of mortgage loans has gone down by nearly 5.6% YoY and stood at 8.03% in January 2008. The interest rates on deposits jumped by 36% YoY and the average interest rate on deposits in BGN stood at 4.89%. The interest rates on Business loans have gone up by an average of 11.7% YoY. Interest rates on long-term loans registered the largest decrease of 17.6%. Source: Pari
Bulgarian American credit Bank [BACB]
49.99% of BACB to be sold for BGN 67 per share
On 22nd of February, BACB announced that Bulgarian American Enterprise Fund has signed a preliminary agreement for the sale of 49.99% of BACB (6 311 000 shares) to Allied Irish Banks P.l.c. at a BGN 67 per share. AIB Group is the largest institution in the banking and financial sector in Ireland. Source: BSE; Investor.bg; FFBH
Energy sector
Sinopec Asia to invest in Bulgarian oil refinery Plama
Sinopec Corp, Asia's top oil refiner, will start a modernization of oil refinery Plama based in Pleven, which is expected to restart production in the next several months. The company said it plans to initially process about 600 000 tons (12 000 barrels per day) of crude oil a year. The investments in the plant will be between €20m and €30m in order to put it into operation and then another €80m to €20m will be invested into the addition of a reforming and a cracking unit.
FIXED INCOME AND MACRO DATA
NB: quotes are only indicative
| Type | Coupon | Maturity | Currency | Yield (%) | Spread Over Treasuries (bps) | Bid (% of par) | Offer (% of par) |
| Eurobonds | 7.50% | Jan-13 | EUR | NA | NA | NA | NA |
| Eurobonds | 8.25% | Jan-15 | USD | 5.30 | 200 | 117.27 | 118.23 |
Most recent macro data
| BGN/EUR exchange rate | 1.95583 |
| Inflation (MoM January) | 1.4% |
| Inflation (cumulative 2008) | 1.4% |
| Base interest rate | 4.83% |
| LEONIA reference rate | 4.82% |
| GDP Growth (Y/Y Jan-Sept 2007) | 5.7% |
| Unemployment (Jan 2008) | 7.38% |
| Public Foreign Debt/GDP (end-Dec) | 15.6% |
| Foreign Direct Investment 2007 (EUR) | 5,687m |
SOFIBOR for Fri, 29 Feb
| Maturity | Rate |
| Overnight (ON) | 4.96 |
| One week (SW) | 5.26 |
| 1-month | 6.34 |
| 3-month | 6.65 |
| 12-month | 7.56 |
SELECTED STOCKS INDICATORS (table)
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