Slovenian Weekly Report 12.2.2018-16.2.2018
- Our last Cinkarna Celje research report had a price tag of EUR 248 per share and consequently a buy recommendation. This was attributed to excellent 9M17 results and more and more also on encouraging 2018 environment outlook. Later on this was confirmed by Cinkarna Celje which issued:
- Its assessment of EUR 47.6m of EBITDA for 2017.
- Guidance of EUR 51.2m of EBITDA for 2018.
- In addition note the company had a net cash position of EUR 42.7m (before environmental provisions are added) on 30th September 2017.
- We believed (based on past track record) Cinkarna Celje could pay out as much as EUR 17.9 per share of dividend, while some small shareholders also called for a share buyback program. This would, given low liquidity, boost share price.
- However the management now disclosed a plan to construct a new plant in Serbia for about EUR 250-300m in the next two to three years’ time. From data above its clear this is a viable plan given the balance sheet (debt possibilities – we believe leverage could mount up to 2x EBITDA) and current excellent cash flow generation. However it’s also clear that this would leave little room for mentioned dividend level in the next 2-3 years some investors were expecting.
- Note details for in-depth calculations are for now lacking.
- All in all as Cinkarna Celje found itself on a turning point, we could expect a big debate among shareholders regarding shorter term strategies (cashing out) and longer term (building).
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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