LHV Institutional Baltic Insight, February 18th, 2020
* Similar to December last year and as per earlier indications from the company, Olainfarm (OLF1R LR; ‘OLF’) recorded almost zero sales to Russia in January 2020, mostly reflecting pre-stocking activities by the major distributors of OLF in that country ahead of changes in the packaging requirements. Russia planned to implement new regulatory requirements and verification system of medical products from January 2020, but the process has been delayed to July 2020.* OLF announced that it has established a subsidiary in Russia to facilitate marketing and distribution of products, market research, and other sales-related functions, which were previously provided by third parties. Although having its own marketing company present in Russia might be a reasonable strategy for OLF in the longer run, building up a proper sales network in the CIS region takes time and money, and we remain concerned regarding the company’s ability to ensure stable sales performance in the near to medium term.
* OLF will publish its Q4 2019 results on 28 February. OLF’s preliminary consolidated revenues for Q4 2019 amounted to EUR 38.9m, up 12% y-o-y. We projected EBITDA to rise 22% y-o-y to EUR 7.7m, with operating and net profits expanding to EUR 5.5m (+20% y-o-y) and EUR 5.0m (+54% y-o-y), respectively. In April 2019, we decided to withdraw our fair value range for the stock and place the company under review until further notice, due to heightened risks surrounding the current management and shareholders’ conflict.
LHV Bank is an independent pan-Baltic bank, based on Estonian capital. The company was founded in 1999 by two founders of Hansapank (today’s Swedbank in the Baltics) and has been offering a full range of investment services for 15 years. In May 2009, LHV received a credit institution licence allowing it to provide all banking services.
The head office is situated in Tallinn, Estonia. Cross-border services are offered in Vilnius, Lithuania and in Riga, Latvia. LHV provides brokerage (institutional and retail), asset management, banking and capital markets services. Compared to other banks, we are more innovative and have more solid experience in investment and entrepreneurship.
The Bank, together with the Group asset management company employs over 320 people. LHV Group shares are listed on Nasdaq Tallinn.
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