Cinkarna Celje 2017: Record results, ambitious plans, low multiples.
Cinkarna Celje has provided investors with record results, but this was already known in begging of January 2018 when it published its preliminary assessment. Cinkarnagenerated EUR 188.7m of revenues, up 11.2% while COGS were down 6.3%. This industry sweet spot boosted EBITDA to EUR 48.8m or by 93% with 4Q17 EBITDA up by 72.5% YoY. Net profit also jumped by 195 % to 28.8EUR, with 4Q17 slightly burdened by provisioning. Given the encouraging 2018 guidance sweet spot will persist this year as well, however the key question for investors will be whether to cash out or use these times to invest into new technology and capacity. This creates some lack of visibility regarding strategy which will last at least until June shareholder assembly. On the other hand, we believe valuations are low, too low. Target price raised to EUR 275. All in all, we are sticking with a buy recommendation albeit investors must be more vary of the upcoming news flow regarding future CAPEX and strategy plan which could be a key turning point of what kind of investment Cinkarna Celje is.
Cinkarna Celje dd is a Slovenia-based company, engaged in the production and marketing of titanium dioxide pigment. The Company's product range includes titanium dioxide and sulfuric acid; titanium and zinc sheets; zinc wire, alloys and anodes; printing plates, links and graphic preparations, as well as powder, rubber and anticorrosion coatings. Additionally, it offers construction and joint sealants; facade plasters; mortars and screeds; decorative plasters; protection, waterproofing and quick bonding agents; cement additives; copper and sulfur fungicides, as well as other chemical products. The Company operates through one wholly owned subsidiary, Cinkarna-Kvarc doo Tuzla, incorporated in Bosnia and Herzegovina.
ALTA Invest, investicijske storitve, d.d., (ALTA Invest, investment services, Inc.) is a part of ALTA Group, the biggest financial non-banking group in Slovenia. ALTA Invest has around 28% market share on the domestic Ljubljana Stock Exchange and has more than EUR 95m of assets under management.
Our trading advantage is our execution of large trading blocks with low impact on the market. We offer trading on several platforms on numerous markets, with a wide variety of financial instruments. Our advantage is also a research department, which is both sell side and buy side and has the far most extensive and regular coverage of domestic companies. We cover 9 companies on Ljubljana Stock Exchange, which is around 90% of Mcap on LJSE – and here we are practically the only local broker providing this kind of extensive and regular coverage for Slovenian companies.
A part of ALTA Group are ALTA Skladi, a mutual fund asset management company with roughly EUR 260m of asset under management. ALTA Group is also extensively involved in corporate finance projects and raised considerable assets (fixed income and equity) in the last two years for several companies.
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