LHV Institutional Baltic Insight, February 17th, 2020

* Baltic Horizon Fund’s (NHCBHFFT) (hereafter referred to as ‘BHF’ or the ‘Fund’) Q4 2019 results, published on 14th February, revealed strong growth in revenues but a deterioration in the profitability margins. The revenues of EUR 7.6m (+45.1% y-o-y) were in line with our forecast, while the operating profit of EUR 5.2m (+10.3% y-o-y) was EUR 0.4m ahead of our estimate. This deviation was due to a EUR 0.4m revaluation gain and was the primary cause of reported operating profit exceeding our EUR 4.8m forecast. Significantly higher financial expenses (i.e. EUR 1.4m in Q4 2019 vs EUR 0.8m in Q4 2018), resulted in a decline in the net profit to EUR 3.4m (-3.4% y-o-y). Please also refer to the tables in the attachment.

* Linda Nektar (LINDA ET, ‘LINDA’) is a small beverage producer based in southern Estonia, focusing on producing unpacked fruit wines and ferments for the beverages industry under a B2B model. The company is listed on First North and reports its financial results semi-annually. LINDA’s H2 2019 results came in much weaker than anticipated, and both revenues and operating profits somewhat declined compared to H2 2018, while we projected improvement from the previous year’s numbers. We assumed that the company’s production could be supported by a recovery in the production of ciders and long drinks by large domestic alcohol producers, resulting in expanding orders from A.Le Coq, but this assumption did not materialise yet. Please also refer to the table in the attachment.

* Novaturas (NTU1L LH) reported a turnover of EUR 8.7m (-6.5% y-o-y) for January 2020, which was c.a. EUR 0.6m above our conservative estimate of EUR 8.1m. Likewise, while the January 2020 client numbers came in at a weaker 12.6k (-11.9% y-o-y), it was still c.a. 2.1k higher than our forecast of 10.5k. The company indicated that Egypt remained the most popular winter destination, and the Canaries grew in demand with a 1.1% y-o-y increase in the number of travellers in January. Please also refer to the charts and table in the attachment.