LHV Institutional Baltic Insight, October 6th, 2020
* Following the improvement in Tallink Grupp’s (‘TAL’ or the ‘Group’) PAX flows in June-July this year compared to the slump recorded in April-May, TAL’s traffic figures have deteriorated again during the last two months. This can be mostly attributed to an uptrend in the coronavirus infection rates in the Baltics as well as the Nordic countries since the middle of August, leading to a growing tendency to avoid any unnecessary travel and shrinking tourist flows. Furthermore, considering the complicated coronavirus situation, the Finnish government decided to re-establish travel restrictions, which are about to curtail TAL’s traffic figures considerably in the coming months.* Total PAX numbers between Estonia-Finland dropped 56.1% y-o-y to 165,700, while the number of passenger vehicles came down 16.7% y-o-y to 52,200. According to TAL, recommendations by the Finnish authorities to avoid travel, referring to the growing coronavirus infection rate witnessed in Estonia, affected TAL’s bookings and ticket sales negatively from the second half of August. We assume that the stronger dynamics in terms of passenger cars compared to PAX numbers mostly relates to Estonians who have permanent jobs in Finland, as many of them prefer to travel by own car.
* In our view, TAL has a very complicated winter season ahead, and the Group may need to apply for additional government support measures in case the latest travel restrictions remain in place for longer. Although the Group is equipped to promptly resume regular operations once the travel restrictions are lifted, the full recovery to pre-crisis traffic numbers may take several years in a worst-case scenario. Given the complicated situation and uncertainty ahead, on 20th March, we placed the stock under review until further notice. Please also refer to the tables in the attachment.
Tallink Grupp AS is a ferry operator providing mini-cruise and passenger transport services in the Baltic Sea region. The Company also offers cargo services on the various routes between Finland-Sweden, Estonia-Finland, Estonia-Sweden, Finland-Germany, and Latvia-Sweden under the brand names of Tallink and Silja Line. In addition, the Group operates four hotels in Tallinn and one in Riga. As of March 28, 2013, the Company's major shareholder was Infortar AS with a stake of 35.81%.
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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