Slovenian Weekly Report 18.12.2017-22.12.2017
- Gorenje is on a real scrutiny from newspaper Finance (www.finance.si):
- The newspaper first questioned their intangibles growth in the last few years as some of the R&D expenses are not being expensed but driven through intangibles (deferred R&D cost etc.). Note Gorenje Group had EUR 217.1m of intangibles on 30th September 2017 versus EUR 381.1m of equity and up by EUR 13.5m YoY.
- Secondly they questioned whether some marketing expenses in Russia were deliberately hidden from supervisory board. Namely that while on one hand sponsorship of football club Spartak was properly disclosed, that on the other hand sponsorship of football club Torpedo is more murky (this is a 2014 story).
- Gorenje responded to both articles, explaining both issues.
- Regarding the first we have always focused on EBITDA and cash flows which already included the mentioned R&D items. It‘s also true that we have for quite some time deemed free cash flows as too low and consequently problematic as debt levels remain elevated, especially as currently economic activity is beneficial and sooner or later harsher economic times will follow suit.
- Regarding the second issue, it‘s probably more of a pressure before the January extraordinary shareholding assembly where several investors are demanding for real changes – starting with a replacement of two supervisory board members.
- All in all, Gorenje has not been (and still is not) our favorite for a long time, risk are elevated – however recommendations vary due to volatile share price shifts.
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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