LHV Institutional Baltic Insight, July 15th, 2020
* Tallinna Kaubamaja Group (‘TKM’ or the ‘Group’) results for Q2 2020 came in much stronger than anticipated across all segments. We acknowledge taking an excessively pessimistic view regarding the impact of movement restrictions and temporary closures of several stores on TKM’s Q2 2020 numbers, also failing to account properly for some operational aspects that influenced the figures positively. Please also refer to the tables and charts in the attachment.* Overall, TKM’s total net sales declined just 5.8% y-o-y to EUR 171.0m, mostly supported by the solid performance of the Group’s largest segment – supermarkets, while we predicted total sales to decline by 20-25% y-o-y.
* Despite TKM’s surprisingly strong numbers for Q2 2020, we remain concerned regarding the Group’s near to medium term outlook. TKM may face further setbacks in the department stores and car trade segments, due to deteriorating consumer confidence and potentially more conservative car financing policies imposed by the banks. On the positive side, the Group has made good progress in terms of expanding the capacity of its e-channels, especially in terms of packaging and delivery of groceries. Supermarkets are expected to continue the relatively steady performance, further strengthened by the acquisition of ABCS. Given the uncertainty ahead, we placed the stock under review until further notice, effective from 23rd March 2020.
Tallinna Kaubamaja is engaged in footwear trade, car trade and retail trade in supermarkets and real estate development in Latvia; and in car trade in Lithuania. Supermarkets focus on the sale of foodstuffs and convenience goods, the department stores on the sale of beauty and fashion products, the car trade on the sale of cars and spare parts to cars. In the car trade segment, cars are sold at wholesale prices to authorised car dealers. In the footwear trade segment, footwear is sold at wholesale prices to family markets. The real estate segment deals with the management and maintenance of real estate owned by Co., and with the rental of commercial premises.
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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