LHV Institutional 'Silvano Fashion Group (SFG1T ET), Annual Review
Please find attached our Annual Review of AS Silvano Fashion Group, a company which designs, manufactures, distributes, and retails lingerie products.* AS Silvano Fashion Group (‘Silvano’ or the ‘Group’) consists of production units and entities that specialise in distribution and retail. The Group’s vertical integration lets it capture the overwhelming share of added value, from product development to retail. Silvano generates over half of its revenues in Russia and about one-third from Belarus.The largest of the Group’s manufacturing facilities – the Milavitsa factory in Minsk, Belarus – permits it to export goods to Russia without incurring the customs duties currently imposed on exports from the European Union.
* As Silvano generates strong cash flows and has no traditional debt to repay, we expect it to maintain a hefty payout ratio once the Russia-Ukraine crisis ends. Currently, we assume that the Group will resume dividend payments from 2023 onwards. We have reassessed our fair value range for Silvano based on the Group’s operating performance and macro factors in its key markets. Given that the earnings outlook in its key markets is drastically changed, we have revised our forecasts and, accordingly, have changed our fair value range from EUR 1.90-2.10 to EUR 1.29-1.43.
* Major risk factors to our valuation include the Russian aggression against Ukraine, potential unfavourable movements in foreign exchange rates, retail stores/factory closures due to the COVID-19 crisis, complications in logistics, and further deterioration in the Russian/Belarusian economies, potentially leading to lower than expected retail spending.This report contains a full set of financial forecasts and is useful for gaining an initial insight into the company. Please also refer to the tables and charts in the attachment.
Silvano Fashion Group AS (SFG), formerly PTA Grupp AS, is an Estonia-based company, which is mainly engaged in the design, manufacture and marketing of women's apparel and lingerie. In addition, the Company provides sewing services to other manufacturers of women's lingerie. The Company owns such brands as Milavitsa, Alisee, Aveline, Lauma Lingerie and Laumelle. The Company is active domestically and abroad in such countries as the Russian Federation, Belarus, Ukraine and the Baltic States, where the Company sells its products through its retail chains, such as Milavitsa and Lauma Lingerie. Silvano Fashion Group AS operates eleven subsidiaries, located in Latvia, Belarus, France and the Russian Federation.
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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