СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
СЕЕ Securities Plc
135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria
tel: +359 2 817 70 77, fax: +359 2 817 70 71
e-mail: info...
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Weekly Bulletin

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CEE Securities, weekly markets update

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Weekly Bulletin

  1. 1. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 30 January – 03 February 2006 BULGARIA The Bulgarian Stock Exchange – Sofia performed mixed with the blue-chips index SOFIX gaining 1.61% and the broader price index BG40 dropping 0.11%. SOFIX climbed on the back of the pharmaceutical company Sopharma (BSE: SFARM) and the fertilizers producer Neochim (BSE: NEOH) More on page 2 175 200 225 250 275 300 325 350 Feb4,2005 Mar18,2005 Apr29,2005 Jun10,2005 Jul22,2005 Sep2,2005 Oct14,2005 Nov25,2005 Jan6,2006 MSCI EM Eastern Europe ROMANIA The Bucharest Stock Exchange rallied strongly last week with the all-stock BET-C index gaining 5.38% to 4,850.44 and the 10-stock BET index advancing 5.14%. The BET-FI index which monitors the performance of the five financial companies (SIFs) is still lagging behind increasing by “only” 2.21% to 54 026.86 points. More on page 4 Eastern Europe MSCI 315.06 -4.79% Bulgaria SOFIX 869.63 +1.61% Romania BET 8,282.97 +5.14% Russia RTS I 1,308.13 -4.74% Turkey ISE 30 56,377 -3.29% Ukraine PFTS 368.45 +3.32% RUSSIA The Russian stock market fell by 5% last week. The RTS I index dropped 4.74% to 1,308.13 points and the MICEX index lost 5.16% to 1,163.75 points. Some call that “consolidation” and others – “correction”. More on page 7 TURKEY After three weeks of growth with the main index of the Istanbul Stock Exchange ISE 100 index passing the barriers of 40,000 and even 45,000 points the Turkish market experienced a negative correction last week dropping about 3%. More on page 9 EASTERN EUROPE Last week the Eastern European markets went in different directions. The Russian rally was followed by a correction, which strongly affected MSCI Emerging Markets Eastern Europe index. RTS I dropped 4.74% and MSCI lost 4.79%. There was the same situation in Turkey - after three weeks of growth the blue-chips index ISE 30 fell 3.29%. After the slow previous week the Romanian boom is back with the BET index advancing 5.14%. The Ukrainian market rallied with the PFTS index gaining 3.32%. Bulgarian market continues to lag behind Romania and Turkey, mostly because of the smaller foreign investment inflows but on the other hand, its lighter growth brings less risk of strong negative corrections. UKRAINE After a short correction on Monday (-1%) the Ukrainian stock market started an upward trend ending the week with the PFTS index 3.32% up. The trading volumes remain high in the first couple of days reaching USD 244 million on Tuesday but on Wednesday they sharply slumped to less than USD 15 million. More on page 11
  2. 2. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 2 BULGARIA Bulgarian Stock Exchange - Sofia www.bse-sofia.bg Stock indices as of 03 February 2006 Index Value Weekly change Year-to-year change SOFIX 869.63 +1.61% +25.61% BG40 139.75 -0.11% +50.89% Market capitalization as of 03 February 2006 (BGN m) (EUR m) listed companies BSE - Sofia 8,782.23 4,490.29 347 Market Developments: The Bulgarian Stock Exchange – Sofia performed mixed with the blue-chips index SOFIX gaining 1.61% and the broader price index BG40 dropping 0.11%. The market ended the first trading day of the week on a positive territory and SOFIX climbed 1.44% on the back of the pharmaceutical company Sopharma (BSE: SFARM) and the fertilizers producer Neochim (BSE: NEOH). During the rest of the week BSE – Sofia followed a hesitating trend and on Thursday the both indices declined. In the last day of the week the both indicators slightly went up: SOFIX gained 0.53% and BG40 inched up 0.49%. Since the beginning of the year Bulgarian market is lagging behind the rest of the South- Eastern European markets, especially Romania and Turkey, which is mostly because of the smaller foreign investment inflows. On the other hand, its lighter growth brings less risk of strong negative corrections. The best performers last week were NEOH climbing 5.7% to BGN 37.80 and SFARM gaining 4.24% to BGN 8.02. The top-losers were the resort companies Slanchev Briag (BSE: SLB) slumping 5.76% to BGN 18.01 and Zlatni Piasatzi (BSE: ZLP) dropping 4.68% to BGN 15.50. Company and Sector News: Tobacco: Plovdiv Yuri Gagarin BT (BSE: GAGBT) & Bulgartabac Holding (BSE: BTH): The Austrian Mayr-Melnhof Karton AG, world leader in recycled fibre-based cardboard, has expressed interest in buying GAGBT. The company, based in Bulgaria’s second largest city of Plovdiv, is controlled by the tobacco monopoly BTH and produces cigarette packaging, filters and spare parts for the cigarette industry. Apart from cigarette packages, GAGBT also manufactures packaging materials for the Bulgarian arm of Swiss food group Nestle, US Kraft Foods, Bulgarian mobile phone operator GloBul, and for the pharmaceutical and cosmetic producers in South-Eastern Europe. The announcement was made by Mayr-Melnhof’s CEO Wilhelm Hoermanseder at a news conference on January 26 after a meeting with BTH’s executive director Hristo Lachev. The government announced a few days earlier that it had decided to move forward with the privatization of BTH and its daughter companies. The cabinet is resolved to offer GAGBT for sale, especially given the serious interest that had already been declared. There have been four attempts so far to sell BTH, the most recent failing in February 2005 when British American Tobacco withdrew a EUR 200m bid to buy the three best-performing cigarette factories, in Sofia (BSE: SOFBT) and Blagoevgrad (BSE: BLABT), as well as GAGBT, saying the difficult
  3. 3. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 3 political environment would prevent it from completing the transaction on a timescale that would ensure a worthwhile return on its investment. The current government, which took office last August, is developing a new privatization strategy for the entire structure of BTH but it is yet to be discussed in details and to be approved by the parliament. BTH owns 80.57% in GAGBT, while the remaining shares are free-float. GAGBT makes about 85% of its turnover from deals with the cigarette-making subsidiaries of BTH. [SofiaEcho] Tourism: Pamporovo (BSE: PAMPO): The universal pension fund Doverie has acquired 53,805 shares (5%) of the capital of the ski resort company PAMPO. For 2005 PAMPO registered a loss of BGN 0.441m compared to the positive financial result of BGN 4.33m a year earlier. The main capital of the company is BGN 17.081m. [Investor.bg] Metals: Kremikovtzi (BSE: KREM): Bulgaria’s monopolist power supplier, National Electric Company (NEC) said on January 27 it would cut electricity supplies to the country’s largest metallurgical plant Kremikovtzi, majority owned by India’s Ispat Industries (controlled by Mital family), over an outstanding debt of 95 million leva. “NEC is unable and refuses to credit KREM any more,” NEC said in a statement. The supplier added it was starting to cut electricity supplies to KREM gradually and the plant would be getting the minimum technological supply of 20 megawatts as of 27 February 2006. NEC claimed the plant continued to accumulate fresh debt of five to six million leva in unpaid electricity bills each month. [SofiaEcho]
  4. 4. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 4 ROMANIA Bucharest Stock Exchange (BSE) www.bvb.ro Stock indices as of 03 February 2006 Index Value Weekly change Year-to-year change BET-C 4,850.44 +5.38% +29.15% BET 8,282.97 +5.14% +41.09% BET-FI 54,026.86 +2.21% +101.63% Market capitalization as of 03 February 2006 (RON m) (EUR m) listed companies BSE 71,163.82 19,727.18 67 RASDAQ Stock Exchange www.rasd.ro Stock indices as of 03 February 2006 Index Value Weekly change Year-to-year change RASDAQ 1,774.77 +1.70% -17.09% Market capitalization as of 03 February 2006 (RON m) (EUR m) listed companies RASDAQ 8,396.85 2,327.67 3,673 Market Developments: The Bucharest Stock Exchange rallied strongly last week with the all-stock BET-C index gaining 5.38% to 4,850.44 and the 10-stock BET index advancing 5.14%. The BET-FI index which monitors the performance of the five financial companies (SIFs) is still lagging behind increasing by “only” 2.21% to 54 026.86 points. The market opened with a flying start and on Wednesday all the indices reached new all-time highs. The higher levels provoked the investors to cash some profits, which lead to a correction on Thursday but in the last day of the week the market recovered with the broad index BET-C increasing by 0.53% and the blue-chips index BET climbing 0.70%. The SIFs index BET-FI didn’t manage to regain its value and closed on a negative territory but its loss was insignificant - 0.07%. The most traded stocks were SIF Moldova (BSE: SIF2), SIF Oltenia (BSE: SIF5) and the bank BRD Groupe Société Generale (BSE: BRD). The top-gainers for the week were the valve producer Armatura (ARM) shooting up 25.22% and the electronic equipment manufacturer Electrocontact (BSE: ECT), surging 20.31%. The biggest losers were the rubber products producer Rolast (BSE: RLS) dropping 12.69% and the oil refinery Astra Romana Ploiesti (BSE: ASP) losing 11.84% of its value. Rasdaq Stock Exchange: On the RASDAQ market, the Rasdaq-C index closed at 1774.77 points on Friday climbing 1.7% compared to 1,745.06 points last week. Most trades took place in the refinery Rompetrol Vega (RASDAQ: VEGA) and the dairy producer and cheese Albalact (RASDAQ: ALBZ).
  5. 5. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 5 Company and Sector News: Oil & Gas: Petrom (BSE: SNP): The oil company sold its participation in the mineral water producer Carpatina to Lipomin Lipova owned by the copper producer Cuprom Baia Mare. According to market sources the transaction is estimated at some EUR3-4m. For 2005 Carpatina estimates a turnover of EUR4.7m and sales of 38.3m litres mineral water. [Ziarul Financiar] Rompetrol Rafinare (BSE: RRC): According to consolidated un-audited IFRS compliant results, the refinery registered during Q4 of last year gross revenues worth USD 475.4m down 8% w/w. During the reported period revenues net of excise duties decreased by 5% w/w to USD 369.1m, while operating profit (EBITDA) reached USD 10.76m down 77% y/y. For Q4 2005, the refinery posted an operational loss after depreciation and amortization of USD 7.2m as compared to the USD 27.6m profit before interest and taxes during the similar period of the previous year, leading to a net loss of USD 27.7m after the USD 24.4m worth net profit register in Q4 2004. During Q4 of last year the refinery did not operate half of the period as it was in scheduled general overhaul and underwent significant modernization operations which increased the refinery's capacity by 10% to 4m tones. The total cost of the modernizations amounted to USD 30m and was entirely capitalized by the company. During the full year 2005 the refinery posted gross revenues worth USD 2.15bn up 40% y/y while net revenues amounted to USD 1.68bn up 48% y/y. EBITDA reached USD 161.8m up 74% y/y leading to a full year EBIT of USD 112.2m as compared to USD 38.9m during the similar period of the previous year and a 2005 net profit of USD 79.9m from USD 6.0m the previous year. [BSE] The shareholders of RRC were called at a GSM on 25 February to elect a new Managing Board. The reference date is February 20. [BSE] Romgaz: According to the Government, the privatization of the Romanian gas producer will not be realized by the sale of the majority stake (51%) to a strategic investor. In this context, for the company's restructuring and privatization the Government is expecting to receive advice from the recently hired consultant- the consortium led by CSFB Europe [Ziarul Financiar] Banking & Finance: Transilvania Bank (BSE: TLV): According to preliminary financial statements, in 2005 the bank’s net profit reached RON 99.7m (EUR 27.5m) up 64% y/y. Net banking income reached RON 382.8m (EUR 105.7m) up 57.3% y/y of which net interest income amounted to RON 209.7m (EUR 57.9m) up 56.1% y/y while net commission income advanced by 37.8% y/y to RON 105.5m (EUR 29.1m). At the end of December the bank’s total assets reached RON 4.92bn (EUR 1.34bn) up 89% y/y. Loans to customers amounted RON 2.96bn (EUR 0.80bn) of which 61% are loans to companies. On the liabilities side, at the end of last year deposits from clients amounted to RON 3.43b (EUR 0.93bn). At the same time, during the year 2005, the bank contracted several foreign financings: EUR 15m from Germany’s KfW and EUR 20m from the International Financial Corporation (IFC). At the same time, the bank issued convertible bonds worth USD 24m of which USD 20m were subscribed by IFC. Last year the bank invested RON 64m (EUR 17.7m) in the expansion of its branch network – over 100 outlets being opened during the reported period, as well as in the modernization of existing ones. [BSE] Romanian Commercial Bank (BCR): According to Austria's Erste Bank president Andreas Teichel, the Austrian banking group, which won at the end of last year the race for the privatization of the Romanian Commercial Bank (BCR) is interested in acquiring also the 30% stake in the bank controlled by the five financial investment companies (SIFs). However, there haven't been any negotiations yet.
  6. 6. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 6 According to the same sources, the State's Assets Recovery Agency (AVAS) negotiated with the SIFs their renunciation to the blocking minority powers before the completion of the privatization. Erste Bank's business plan for BCR targets a contribution of the Romanian bank of at least 20% to the group's consolidated net profit by the year 2009. The BCR group structure could be modified also, possible divestments being BCR's non-life insurance business and its London office of the Anglo- Romanian. [Ziarul Financiar] Chemicals: Oltchim (BSE: OLT): The chemical company announced for the year 2005 an un-audited net profit of RON 24.8m (EUR 6.8m) down 70% y/y while sales advanced by 17.4% y/y to EUR 398m. Oltchim was affected by the surge in raw material prices after the increase in global oil prices. Oltchim’s main supplier is the refinery Arpechim operated by the petroleum company Petrom. For the current year the company expects sales worth RON 1.7b (EUR 470m) and a net profit of RON 44m (EUR 12m) almost double compared to last year. [Oltchim] Retailing: Flamingo (BSE: FLA): The IT retailer announced the sale of its participation in the US based IT Solar LLC and the transfer of the corresponding commercial activates to Flamingo Holland. At the same time, as of January the company halted its operations on the Croatian market in order to focus its resources for an accelerated development in Serbia and Montenegro. [BSE] Infrastructure: Electrica Oltenia: The Czech electrical company CEZ, which took over in October last year the Romanian electrical company Electrica Oltenia, will pay another EUR15.4m besides the EUR47.3m initial value. Therefore the Czech company will pay 25% more for the 24.62% stake in Electrica Oltenia comparing with the value stipulated in the privatisation agreement. This is due to a contract clause according to which the value of transaction will be adjusted based on the financial results of the company. [Ziarul Financiar]
  7. 7. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 7 RUSSIA Russian Trading System (RTS) www.rts.ru Stock indices as of 03 February 2006 Index Value Weekly change Year-to-year change RTS I 1,308.13 -4.74% +99.83% RTS 2 1,553.93 +1.02% +75.28% Market capitalization as of 03 February 2006 (USD m) (EUR m) Traded issues RTS 69,128.16 57,272.71 380 Moscow Interbank Currency Exchange – MICEX www.micex.com Stock indices as of 03 February 2006 Index Value Weekly change Year-to-year change MICEX 1,163.75 -5.16% +96.32% MICEX10 1,898.61 -3.91% +67.94% Market capitalization as of 03 February 2006 (RUR m) (EUR m) traded issues MICEX n.a. n.a. n.a. Market Developments: The Russian stock market fell by 5% last week. The RTS I index dropped 4.74% to 1,308.13 points and the MICEX index lost 5.16% to 1,163.75 points. Some call that “consolidation” and others – “correction”. However the indices lost their gains form the previous week and the most important issue for the investors is whether the growth will go on or the market will start a down-trend. While there is no crucial negative fundamental news we believe that this correction was caused by cashing profits and the market will continue its upward trend. The most traded stocks for the week were Gazprom (RTS: GAZP), LUKOil (RTS: LKOH) and RAO UES (RTS: EESR). GAZP dropped 4.90%, LKOH lost 6.78% and EESR joined the top-losers plunging 7.65%. The other top-losers among the blue-chips were the preferred shares of Transneft (RTS: TRNFP) slumping 11.81% and Surgutneftegaz (RTS: SNGS) falling 7.61%. Company and Sector News: Oil & Gas Surgutneftegaz (RTS: SNGS): On Monday Surgutneftegaz held a press conference to sum up its FY2005 results and made public some of its 2006 targets. According to the oil major’s CEO Vladimir Bogdanov, Surgut’s Q405 results turned out to be softer than in July-September 2005. He explained that deterioration came from a spike in oil export duties. According to Bogdanov, the oil firm’s 2005 sales totaled USD 15.2bn, with tax payments equaling USD 11bn. According to his estimates, the company’s tax payments will rise by another 15% in 2006. SNGS lowered its 2006 crude production
  8. 8. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 8 target by 500,000 tons to 67.1m tons. The company intends to increase its 2006 investment program by 19% to USD 2.46bn. Most of this amount (USD 550m) is to be allocated to the upgrade of the oil major’s only refinery, Kirishinefteorgsintez, at which a hydro cracking facility will be brought on stream in 2008. Gazprom (RTS: GAZP): Gazprom came out with its 9M05 un-audited non-consolidated interim financial statement compiled under IAS. During the first nine months of 2005 the gas holding's sales surged 35% to USD 32bn, operating expenses grew at a slower pace (21%) and reached USD 20.9bn. Consequently, the gas holding exhibited unexpectedly strong growth rates in both operating and net profit (73% and 70%, respectively). As a result, 9M05 sales profit totaled USD 11.2bn (operating profit margin – 35%) and net profit amounted to USD 8.3bn (net profit margin – 26%). Meanwhile, Gazprom's net debt climbed 4% from RUR 500bn (USD 17.8bn) as of December 31, 2004 to RUR 520.6bn (USD 18.5bn) as of September 30, 2005. For the time being, this amount does not include the loan facility granted to take over Sibneft. Banking Sberbank (RTS: SBER): On Monday, January 30, 2006 quasi-state banking monopoly came out with its 2005 financial statement according to which net profit has reached RUR 64.5bn (USD 2.3bn) and pre-tax profit totaled RUR 81.3bn (USD 2.9bn). As the news agencies reported earlier, the SBER’s net and pre-tax profits for 2004 amounted to RUR 44.2bn (USD 1.5bn) and RUR 52.6bn (USD 1.8bn) respectively. Thus, the bank’s net profit has surged by 46%, while its pre-tax profit has rocketed 54.5%. The capital of SBER stood at RUR 254.4bn (USD 9.08bn) as of January 1, 2006, or up a whopping 46.6%. The bank’s year-end 2005 credit portfolio totaled RUR 1,933bn (USD 69.03bn), or up 37.6% year-on-year. The growth in the private deposits remained quite high (26.7%), while balances of funds held on household accounts amounted to RUR 1,500bn (USD 53.5bn). By January 1, 2006 legal entities held RUR 583.4bn (USD 20.8bn) on Sberbank’s accounts, a 28% y-o-y rise.
  9. 9. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 9 TURKEY Istanbul Stock Exchange www.ise.org Stock indices as of 03 February 2006 Index Value Weekly change Year-to-year change ISE-100 44,228 -2.40% +59.02% ISE-30 56,377 -3.29% n.a. Market capitalization as of 03 February 2006 (USD m) (EUR m) listed companies ISE 182,697.52 151,364.97 310 Market Developments: After three weeks of growth with the main index of the Istanbul Stock Exchange ISE 100 index passing the barriers of 40,000 and even 45,000 points the Turkish market experienced a negative correction last week dropping about 3%. The all-time peaks of ISE 100 from the previous week were followed by 2.40% drop to 44,228 points. The investors’ sentiment for cashing the profits took down also the blue-chips index ISE 30, which lost 3.29% reaching 56,377 points. There was an attempt for turning the trend up on Wednesday with the both indices climbing about 1.5% but the sellers prevailed in the last two days of the week. The most traded stocks were Akbank (ISE: AKBNK), Ereglı Demır Celık (ISE: EREGL) and Yapı Kredi Bankası (ISE: YKBNK). Company and Sector News: Yapı Kredi Bankası (ISE: YKBNK): YKBNK made an announcement to the ISE, stating: a) Koc Finansal Hizmetler committed to YKBNK to pay the difference of the bank’s payment to the government, which arose from the transfer of YKBNK’s pension fund to the Social Security fund, as well as EUR 350m. This commitment will be valid for a period of three years. According to the agreement between the parties in the case described above, Cukurova Group’s debt to YKBNK will decline by the amount of the difference between this amount and the deficit. b) Within the share transfer agreement, if, through the non-core asset sales, a difference for Cukurova Group’s benefit arises, Cukurova Group’s debt will then be reduced by this amount. This commitment is also valid for the duration of the agreement. The agreement allows for a six-year period for the non-core asset sales. Recall that, on September 28th Cukurova Group and SDIF sold 57.42% of YKBNK to Kocbank for EUR 1,182m. From its sales proceeds, Cukurova Group paid back approximately USD 1.1bn of its USD 2bn debt to YKBNK. In addition, Cukurova Group obtained a 15% discount on its debt to YKBNK (amounting to USD 304m); its remaining debt of USD 791m was restructured within a ten-year payment program. Tupras (ISE: TUPRS): An Unexpected Decision by the State Council for Tupras’s Privatization. The State Council issued an injunction decision regarding the 51% block sale of TUPRS, however there are mixed comments regarding the State Council’s decision. On one hand, it is argued that with the court’s decision, TUPRS should be returned to state ownership; on the other hand, the state-
  10. 10. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 10 ownership is not viable since the share transfer has already been completed. Even if the Privatization Agency rejects a possible return of TUPRS shares to the public despite the State Council’s decision, there may be new lawsuits with respect to the implementation of the State Council’s decision. Therefore, the judicial period can be expected to last awhile. Due to the uncertainties, the stocks relating to TUPRS may follow weak trading and affect the market negatively. Dogan Yayin Holding (ISE: DYHOL): decided to increase its paid-in capital by YTL 32.5m (5.6385%) from YTL 576m to YTL608.5m. Current shareholders’ rights will be restrained and new shares will be sold to large scaled institutional investors. The sale price of the DYHOL shares will be YTL 6.05 per share.
  11. 11. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 11 UKRAINE PFTS Stock Trading System www.pfts.com Stock indices as of 03 February 2006 Index Value Weekly change Year-to-year change PFTS 368.45 +3.32% +8.06% Market capitalization as of 03 February 2006 (USD m) (EUR m) listed companies PFTS 29,552.36 24,484.14 268 Market Developments: After a short correction on Monday (-1%) the Ukrainian stock market started an upward trend ending the week with the PFTS index 3.32% up. The trading volumes remain high in the first couple of days reaching USD 244 million on Tuesday but on Wednesday they sharply slumped to less than USD 15 million. In spite of that, the prices continued to grow and in the last day of the week another rally boosted the PFTS index 2.15% to the all-time high of 368.45 points. The previous record of PFTS was on 13 September 2005 when it reached 365.19 points. This growth was mainly caused by Ukrtelekom (PFTS: UTEL), which surged 5.11% to USD 0.159 and the largest Ukrainian oil company Ukrnafta (UNAF), which climbed 4.26% to USD 48.515. These two companies have the biggest weight in the PFTS index. The most-traded stocks were Bank Aval (PFTS: BAVL), the iron ore processing company Poltava GOK (PFTS: PGOK) and Kherson oil refinery (PFTS: HNPK). BAVL gained 6.14% to USD 0.081, PGOK advanced 3.45% and HNPK surged 11.10%. The top-winner of the week was Ukrsocbank (PFTS: USCB) shooting up 210.34% with a very modest volume of about USD 50,000. Previous week the bank accomplished a 4.3 times capital increase but its stock price dropped by just 3 times. With the last week’s jump the price of the new shares is already the same as before the capital increase. The other best-performer of the week was the locomotives producer Luganskteplovoz (PFTS: LTPL) surging 76.15% to USD 0.453 because of the positive news about the company (see below). LTPL is a monopolistic producer of trunk-line cargo diesel locomotives in the CIS countries and it is specialized also in the production of the AC electric locomotives, tram and trailer cars, ore-mining equipment, caterpillar transporters and cargo machines, and agricultural equipment. In addition, LTPL renders services on railway machinery repairs of any level of complexity. Company and Sector News: Banking: Bank Aval (PFTS: BAVL): Bank Aval continues to satisfy positive expectations - Bank Aval released its year-end 2005 financial results on Thursday, which showed that the Bank has increased its assets by 62.4% to UAH 19.3bn (USD 3.82bn), or by 43% y-o-y. The Bank’s credit portfolio has grown by 49% to UAH 12.7bn (USD 2.52bn) while operating liabilities have picked up by 66% mainly due to a growth in individual customer deposits. Bank Aval showed slow but steady net profit growth in 2005, which has increased by 5% to UAH 18.2m (USD 3.6m) in 2005. [Interfax]
  12. 12. СЕЕ Securities Plc 135 Tzarigradsko Shosse, 1784 Sofia, Bulgaria tel: +359 2 817 70 77, fax: +359 2 817 70 71 e-mail: info@cee-securities.com www.cee-securities.com 12 Machine-building: Luganskteplovoz (PFTS: LTPL): The Kyiv’s Court of Appeal has ruled that the 2001 privatization of Luganskteplovoz by HC AvtoKraz was illegal, so the 76% share stake will be transferred to the State Property Fund (SPF) within 10 days. The court’s decision now allows for the stake to be re-privatized in 2006. State Property Fund head Valentina Semenyuk stated that the SPF wants UAH 2.5bn (USD 495m) for this stake in LTPL and that the privatization documents should be completed by the end of February. The privatization will be held at an open tender at which registered parties will bid for the company. Interested parties include Russia’s Transmashholding and Bombardier. [Interfax] At 27 January, LTPL and Russia’s Transmashholding made a joint presentation of the new locomotive 2EL5. The new model of locomotive uses 13% less electricity than comparable models and can reach speeds of up to 160 km/hour. Transmashholding and Luganskteplovoz have signed a cooperation contract to produce 50 such locomotives by 2010. Ukrzaliznytsia, the Ukrainian State Railway Company, has said that it will order several of the new locomotives, according to LTPL’s CEO, worth UAH 700m (USD 138.6m) in 2006 and UAH 1,200m (USD 237.6m) in 2007. Politics & Economy: Gas supply: Thursday evening Naftogaz Ukrainy and RosUkrEnergo announced that they had created a joint company to distribute natural gas imported from Russia and Central Asia in Ukraine. The new company, called Ukrgaz-energo, will purchase 35bn cubic meters of gas from RosUkrEnergo in 2006 and up to 60bn cubic meters in the next four years. According to Naftogaz, the price the joint venture will pay RosUkrEnergo for gas for the next five years is USD 95 per 1000 cubic meters. Government debt: Ukrainian government debt (direct and secured) was UAH 78,145.7m (USD 15,474.4m) for December 31, 2005. This includes UAH 58,956.5m of foreign debt and UAH 19,189.3m of home debt. Government direct secured debt of Ukraine was UAH 63,144.6m (80.8% from total debt amount) or USD 12,503.9m including government direct secured foreign debt – UAH 43,956.3m or USD 8,704.2m, government direct secured home debt – 13,462.0m UAH or USD 1,133.9m. Cut down of government debt is connected with EURO exchange rate fall. Government direct home debt shortened 8.4% (UAH 1,765.0m), that was connected with payments for home debt redemption exceeded home borrowings. Secured government debt was UAH 15,001.1m (19.2% from total debt amount) or USD 2970.5m, including secured foreign debt – USD 2970.3m and secured home debt – USD 0.2m. In 2005 government secured debt decreased 15.3% in UAH and 11.1% in USD. For comparison, in 2004 total amount of government debt of Ukraine increased 10.7% to UAH 85 397.03m (USD 16,096.2m).

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