Overview
Stocks Finally Bounce Back
Bulgarian shares brokethe black series of November and finished the last week of the month mostly higher. SOFIX were trading in positive territory in four out of five sessions and finished the week up 8.6%. Severe losses in the first three weeks of the month, however, made it one of the most depreciating indices in the world in November as SOFIX dropped 26.2% in just one month. The wider BG40 posted gains in each of the last five days and advanced by 8.23% within the week. Turnover remained low, excluding heavy trading with the shares of Petrol [5PET], as the main shareholders – Petrol Holding and Naftex Pertol Ltd, have been exchanging packages from the capital of the oil retailer during the last two weeks.
The week was marked bya number of consolidated 9M financial statements which were due at the end of the month. Most of the statements revealed deteriorating profits and shrinking profit margins which were combined with decreasing revenues for some of the companies. Among the worst hit companies was Sparky AD [SPV]. Consolidated revenues of the machinery producer dropped by 23.37% for the nine months finishing September 30. However, operating expenses decreased more rapidly and EBIT actually increased to BGN 4.6 mln vs. BGN 1.7 mln a year earlier. Surging financial expenses however pushed the bottom line to BGN 3.5 mln, down 55%, however.
Most of the companies reported shrinking profitability, mainly due to busting operating and/or financial expenses. Operating expenses of Chimimport [6C4], Trace Group Hold [T57], Sopharma [3JR], Kaolin [6K1], Enemona [E4A] and Orgachim [5ORG] were rising faster then revenues thus operational profitability worsened. Surging FOREX income, however, helped Chimimport to report a 5% higher 9M net profit of BGN 93.6 mln but all the other companies saw its bottom line sinking. Although Doverie United Holding AD [5DOV] reported 20% higher consolidated revenues and 32% higher EBIT, net income dropped by 66% due to the of lack significant income from financial operations that the company enjoyed last year. Zarneni Hrani Bulgaria AD reported 9M net consolidated sales of BGN 147 mln, which is 51% of the projection for the entire 2008. Net income of the company accounted for BGN 7.9 mln, while the company aimed at BGN 21.8 mln for the entire year. There were, however, some positive surprises, like Synergon Holding [6S7], Agria Group [A72], Industrial Capital Holding [4I8] and Oil and Gaz [4O1], which managed to boost both their sales and net profit.
Local companies have already been affected by the credit crunch since the credit market has tightened and interest rates have increased significantly since the beginning of the year. In an attempt to ease the credit market the Bulgarian National Bank stepped on Friday and decreased minimal reserves requirement from 12% to 10% for deposits made by local persons, from 10% to 5% for deposits made by foreign physical and legal entities and to 0% for deposits made by the government and municipalities. Meanwhile, BNB announced that banks have granted 24.4% less loans in October as compared to October 2007.
| Value | Weekly Chng | YTD Chng | |
| SOFIX | 363.27 | 8.61% | -79.45% |
| BG 40 | 108.60 | 8.23% | -79.04% |
| BG REIT | 47.38 | 2.13% | -54.11% |
| BGTR 30 | 280.83 | 5.14% | -74.41% |
| Shares Turnover (BGN th) | 69 833.37 |
| Bonds Turnover (BGN th) | 13 941.75 |
| market Capitalisation (BGN mln) | 12 336.86 |
| market Capitalisation/GDP | 19% |
Trends
| Top Gainers | Ticker | Chng | Top Losers | Ticker | Chng |
| SS Konstantine&Elena Hold | 3NJ | + 40.26% | ERG Capital-3 REIT | 5ER | -23.08% |
| Trace Group Hold AD | T57 | + 36.36% | Bulland Invest. REIT | 5BD | -17.69% |
| CB Central Coop. Bank | 4CF | + 31.09% | Agro Finance REIT | 6AG | -16.67% |
SOFIX (chart, table)
BG 40 (chart, table)
Main Economic Indicators (table)
East European Markets (table)
news of the Week
Corporate Sector
- Four Bulgarian companies are the final bidders for the construction of the remaining 37 km section of Bulgaria's key Trakia motorway, local media reported on Tuesday. The companies that have already submitted offers for the construction works valued at some BGN 340 mln are Glavbolgarstroy, Holding Roads [6H2], Moststroy [5MY] and Trace Group Hold [T57].
- Monbat [5MB] on Tuesday reported a 10.3% y-o-y drop to BGN 17.1 mln in October sales revenue. At the same time, the company’s sales through October increased by 46.4% y-o-y to BGN 152.3 mln and pre-tax profit surged by 82.5% y-o-y to BGN 26.2 mln. Monbat expects to raise 2008 unconsolidated pre-tax profit by more than 50% to BGN 30.6 mln as sales are seen reaching BGN 180.2 mln.
- Consolidated 9M revenues of Doverie United Holding AD [5DOV] advanced by 20% y-o-y to BGN 156.2 mln but earnigs dropped by half to BGN 7.7 mln, the company said.
- Stara Planina Hold AD [5SR] reported 5.75% higher 9M consolidated revenues of BGN 71.69 mln. At the same time net profit dropped by 21% to BGN 5 mln. The company also said it plans to buy back up to 0.5% of its capital at a price between BGN 1.55 and BGN 2.1 per share. The repurchase of up to 105,000 shares started on Wednesday and will last through January 30.
- Net consolidated profit of Albena - Invest AD [5ALB] dropped by 85% y-o-y to BGN 1.7 mln in the nine months through September, the company’s Q3 financial statements showed. Revenues went down by 20% to BGN 10.8 mln.
- Enemona’s [E4A] nine-monthconsolidated net profit fell by 10.5% year-on-year to BGN 9.3 million levs, the company reported. Enemona’s sales revenue rose by 39.6% to BGN 84.8 mln, while costs were up by 46.2% to BGN 77.65 mln.
- Sopharma AD [3JR] on Friday said its nine-month net profit fell by 37% year-on-year to BGN 16.9 mln as costs rose faster than sales. sales revenue rose by 36.7% to BGN 345.04 mln, while costs were up by 47.2% to BGN 331.18 mln. The company expects no increase in this year's pre-tax profit despite the fact that it sees sales revenue growing by a yearly 5.0%-10% in 2008, it said in a statement.
Economy and Politics
- Bulgaria will lose EUR 220 mln in EU funding under the bloc’s pre-accession PHARE programme because of mismanagement, the European Commission said. “We recognise that steps have been taken regarding the management and control systems for PHARE. However, most of the measures are promise of future action and have not yet delivered concrete results,” EU spokesperson Krisztina Nagy said. The government, on the other hand, said that the staff of the two agencies that used to handle the aid has made exceptional efforts over the last six months to correct the irregularities.
- Bulgaria's central bank (BNB) is cutting the minimum reserve requirement for commercial banks to 10% from 12% effective Monday, it said on Thursday. BNB also cut the minimum reserve requirement on funds attracted from abroad to 5.0% from 10%. The central bank said that its previous move to increase the minimum reserve requirement to 12% from 8.0% has achieved its goal to curb growth in lending. credit growth in the country has slowed to 40% this year after a 64% jump in 2007.
- Bulgaria's government expects the country’s GDP to grow by a real 4.7% in 2009 and by 5.2% in 2010 under an optimistic scenario for the expected impact of the global crisis, according to the government's three-year programme for convergence with other EU member states, media reported on Friday. In case the external environment deteriorates considerably, Bulgaria's economic growth may fall to 2.1% next year before accelerating to 3.6% in 2010. Under this scenario the government will target budget surplus of 1.6% of GDP in 2009 and 1.1% in 2010, compared to above 3% now.
- October producer prices dropped by 0.9% month-on-month and advanced by 8.9% on the year, data from the National Statistics Institute (NSI) showed on Friday. Prices in the manufacturing segment fell by a monthly 1.2% and prices in mining decreased by 2.2% monthon- month. Prices in the utilities sector, on the other hand, were up by 1.2%. Producer prices in September were down by 0.4% month-on-month and up by 11.3% year-on-year.
BG40 Stocks (table)
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Newsletter Weekly 2008.11.24-28.pdf, 77 Kb
