Report
Shana Gavron

LHV Institutional Baltic Insight, March 19th, 2020

* After negligible sales in Russia in January, primarily due to earlier pre-stocking activities by Olainfarm’s (OLF1R LR; ‘OLF’) distributors in that country, ahead of changes in the packaging requirements, the respective volumes started to recover in February. OLF managed to stabilise its total sales for February 2020 in comparison to the same month a year ago, supported by solid growth rates recorded in Belarus, Central Asia, and EU markets. OLF’s preliminary consolidated revenues for February declined 4% y-o-y to EUR 11.0m, up 45% m-o-m, bringing the cumulative two-month revenues to EUR 18.5m, down 22% y-o-y. Please also refer to the tables in the attachment.
* Looking forward, the company claims it should not be impacted negatively by the current coronavirus spread across the globe. The management sees no problems with the availability of raw materials, and it has taken measures to secure the health of employees. OLF kept its full-year 2020 revenue and profit guidance intact. The management expects the company’s total revenues to reach EUR 135.5m (-1% y-o-y) in 2020, projecting net profits to fall 48% y-o-y to EUR 14.3m. However, it should be noted that the recent sharp declines in RUB, BYN, KZT, UAH, and other CIS and Central Asia currencies against the EUR may lead to a considerable setback in OLF’s revenues from those markets in EUR terms. The RUB is down about 25% YTD, with BYN, KZT, and UAH dropping c.a. 13-14% since the start of this year.
* Besides, the ongoing conflict between the heirs of Mr Maligins remains problematic and entails higher risks going forward. 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. Our fair value range for the stock is under review (closing price as of 18 March: EUR 5.48).
Underlying
Olaines Kimiski - Farmaceitiska Rupnica

Provider
LHV PANK
LHV PANK

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.

Analysts
Shana Gavron

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