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 26 February – 03 March 2006 EMERGING MARKETS INDICES MSCI EM 256.636 -1.34% MSCI EM Europe 421.779 -0.36% Bulgaria SOFIX 881.35 +0.17% Romania BET 7,951.09 -0.33% Russia RTS I 1,487.11 +1.47% Turkey ISE 30 58,480 -1.81% Ukraine PFTS 432.83 +3.92% MSCI EM Brazil 358.952 +0.65% Brazil iBovespa 39,240 +1.63% 100 150 200 250 300 350 1December2004 1January2005 1February2005 1March2005 1April2005 1May2005 1June2005 1July2005 1August2005 1September2005 1October2005 1November2005 1December2005 MSCI EM (EUR) MSCI EM Europe (EUR) MSCI EM Brasil (EUR) MSCI EM Asia (EUR) MSCI EM Asia 199.743 -1.55% EMERGING MARKETS OVERVIEW Last week the emerging markets performed mixed with the Brazilian, Russian and Ukrainian indices going up and the Asian, Romanian and Turkish benchmarks closing in red. The global emerging markets index MSCI EM dropped 1.34% while the MSCI EM Europe lost only 0.36% because the correction in Turkey was partially compensated by the growth in Russia. The Ukrainian stock market keeps on its boom with the PFTS index climbing 3.92% and reaching the impressive YTD growth of 22.63% but some analysts foresee a negative correction coming soon. Brazil and Russia outlined among the rest of the emerging markets mostly on the back of the oil prices. CEE SECURITIES NEWS CEE Securities proudly presents to you the best opportunity to earn from the emerging markets. The company has extended its range of services by launching new very advanced product, Global Emerging Markets Portfolio. By investing in this product you will get yield from the fastest growing stock markets all around the world (average GDP growth per year of 5%) as the Brazilian, Chinese, Indian, Russian, Turkish, etc. In addition, you will minimize the risks by spreading your investment among the different markets, and having highly diversified portfolios on each market. BRAZIL Brazilian stock market closed at a new all-time high on Friday for the 15th time this year with the main index of the Sao Paulo Stock Exchange, iBovespa (BVSP) picking up 1.63% to 39,240 points. More on page 2 BULGARIA The Bulgarian stock market ended the week slightly up with the blue-chips index SOFIX inching up 0.17% to 881.35 points and the broader index BG40 closing at 143.15 points, only 0.01% up. More on page 3 ROMANIA The Bucharest Stock Exchange performed mixed with the all-stock BET-C index decreasing insignificantly by 0.04% to 4,705.41 points and the blue- chips BET index inching down 0.33% to 7,951.09 points. More on page 5 RUSSIA The 6-day working week for Russian market was full of interesting turns and at the end the two main stock exchanges closed on a positive territory with the RTS I index gaining 1.47% to 1,487.11 points. More on page 7 TURKEY There was an expected correction on the Istanbul Stock Exchange with the main index ISE 100 declining 1.01% to 46,366 points and the blue-chips index ISE 30 losing 1.81% to 58,480 points. More on page 9 UKRAINE The Ukrainian stock market keeps on its boom with the PFTS index climbing 3.92% to 432.83 points and reaching the impressive YTD growth of 22.63%. Up to Wednesday the index registered 3 consecutive historical records going beyond 430 points. More on page 10
  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 BRAZIL Sao Paulo Stock Exchange (BOVESPA) www.bovespa.com.br Stock indices as of 03 March 2006 Index Value Weekly change Year-on-year change iBovespa 39,240.00 +1.63% +33.22% Market capitalization as of 03 March 2006 (USD m) (EUR m) listed companies BOVESPA 619,630 518,736 380 Market Developments: Brazilian stock market closed at a new all-time high on Friday for the 15th time this year with the main index of the Sao Paulo Stock Exchange, iBovespa (BVSP) picking up 1.63% to 39,240 points. The bourse was closed during the first two days of the week due to Carnival Holiday. On Wednesday the Brazilian traders came back to work after the Carnival celebrations and they lifted the stocks to a record high for the week on news that Standard & Poor's upgraded the country's credit rating. The local currency ended near a five-year high, while the iBovespa index pierced the 39,000-point level for the first time in history. The most traded stocks were the mining giant CVRD (NYSE: RIO), the oil company Petroleo Brasileiro (NYSE: PBR) and the bank Bradesco (NYSE: BBD). Company and Sector News: Oil & Gas Petroleo Brasileiro (NYSE: PBR): PBR, Brazil's state-controlled oil company, will pay about 50 million reais (USD 23 million) more a month in sales taxes after the state of Rio de Janeiro revoked a tax credit. [Globo] PBR will slash its gasoline exports by 60 percent to compensate for a cut in ethanol used in locally-sold gasoline, officials said on Thursday. PBR Supplies Director Paulo Roberto Costa said the company will cease to export 146 million litres per month of gasoline, or 30,600 barrels per day. [Reuters] Ore-mining Companhia Vale Do Rio Doce (NYSE: RIO): Brazil's CVRD, the world's No. 1 iron ore miner, is expected to post a fourth-quarter profit 67 percent bigger than a year ago on higher ore prices and increased sales. An average of five analysts' forecasts gathered by Reuters showed that Companhia Vale do Rio Doce (CVRD) should net around 2.5 billion reais (USD 1.2 billion), posting a record profit of over 10 billion reais for the whole of 2005. [Reuters] Economy & Politics: Credit Rating: S&P raised Brazil's credit rating on February 28 to "BB" from "BB-minus" with a stable outlook. The upgrade was expected but not as big as some traders had hoped. Some thought the upgrade would be for two notches, or one notch with a positive outlook. Brazil, which has been aggressively buying back foreign debt to get rid of old and expensive liabilities, needs to wait for two more single-notch upgrades to reach investment grade, a status that allows countries to borrow for lower interest rates and longer terms. [Reuters]
  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 BULGARIA Bulgarian Stock Exchange - Sofia www.bse-sofia.bg Stock indices as of 03 March 2006 Index Value Weekly change Year-to-year change SOFIX 881.35 +0.17% -0.11% BG40 143.15 +0.01% +13.08% Market capitalization as of 03 March 2006 (BGN m) (EUR m) listed companies BSE - Sofia 8,937.34 4,569.59 347 Market Developments: The Bulgarian stock market ended the week slightly up with the blue-chips index SOFIX inching up 0.17% to 881.35 points and the broader index BG40 closing at 143.15 points, only 0.01% up. The BG40 hit all-time high twice during the shorter week (the market was closed on Friday because of the Liberation Day). The record value was 144.24 point, reached on Monday and Wednesday. The stock market was almost flat in spite of announcements of the consolidated financial reports of the main Bulgarian public companies. The SOFIX increased its value on the back of the tobacco monopoly Bulgartabac Holding (BSE: BTH) gaining 4.66% to BGN 29.90, the pharmaceutical company Sopharma (BSE: SFARM) climbing 1.28% to BGN 8.65 and the Central Cooperative Bank (BSE: CCB) advancing 1.75% week-on-week to BGN 6.38. Company and Sector News: Tobacco Bulgartabac Holding (BSE: BTH): Bulgartabac Holding opens procedures for sale of own shareholding in daughter companies. The companies, manufacturing cigarettes: Sofia-BT (BSE: SOFBT), Blagoevgrad-BT (BSE: BLABT), Plovdiv-BT (BSE: PLOBT) and Slantze Stara Zagora BT (BSE: SUN) remain in the holding structure as BTH will keep its shareholding there. The following actions shall be taken in Plovdiv Yuri Gagarin BT (BSE: GAGBT): 1. Sale of the Spare Parts Plant as separate asset through a publicly announced tender; 2. Sale of Cigarette Filter Making Machines to Blagoevgrad-BT or Plovdiv-BT; 3. Afterwards Bulgartabac Holding will put to sale its shareholding in the company. Telecommunications Bulgarian Telecommunication Company (BSE: BTC): BTC, Bulgaria's dominant landline telecom carrier, posted a consolidated profit of BGN 110.8m for the last year, down from BGN 253.2m for the previous year, shows the financial report of the company. The company reported consolidated loss of BGN 66.2m for the last quarter of 2005. Q4 revenues topped BGN 251.08m, slightly off year-on-year, while expenses came in at BGN 324.58m, sharply up from BGN 197.82m a year ago. [BTC] Insurance Euroins (BSE: EURINS): The insurance company Euroins announced its financial forecasting about the company’s activity for the first quarter of 2006. The expected premium income’s growth is 25% towards the same period of 2005 or BGN 10,5m towards BGN 8,43m. The expected growth is about 5 times bigger than the comparison between first quarter 2005 and first quarter 2004 when it was 5.23%. The expectations for the financial result are realization of profit on amount of BGN 125K. For the same period of the previous year the company registered a loss at the rate of BGN 83K. [BSE – Sofia]
  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 Medical dressing materials Medica (BSE: MDIKA): The management of the company has appointed a General Meeting of Shareholders on April 11. The Management Board proposes to the meeting the net profit of the company for 2005 on a total amount of BGN 1.12m to be allocated as follows: BGN 848K to be allocated as dividend distribution on amount of BGN 2.60 per share with BGN 1.00 par value and the rest of BGN 272K to be set aside as additional reserves. The final date for the deals with shares of this company, in result of which the holder will be entitled to exercise his voting right at the meeting, will be March 24. [BSE – Sofia] Holding Companies Napredak Holding (BSE: NAPH): The BSE-Sofia announced that has received a notification pursuant to the provisions of the Public Offering of Securities Act about a result of a tender offer for redemption of securities of Napredak Holding. A total of 19 natural persons with 18 954 shares accepted the offer at the price BGN 1.81 per share. Offerors was Pacific 2000 OOD and Lidincom Establishment. [BSE – Sofia] Economy & Politics: Ratings: Moody's Investors Service upgraded Bulgaria's foreign currency bond and deposit ceilings as well as foreign and local currency bond ratings to Baa3/P-3. The local currency bank deposit ceiling was also upgraded to Baa1. The outlook on all these ratings is stable. The local currency guideline remains Aa3. The upgrade was prompted by significant improvements in key areas and the short-term prospects for EU accession. "The government's financial position and the quality of its institutions have now reached a point where Bulgaria can be considered an investment-grade credit," says Moody's, "and the country's likely accession to the EU next year should anchor these improvements and sustain momentum for a continuation of reforms." [Moody's]
  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 ROMANIA Bucharest Stock Exchange (BSE) www.bvb.ro Stock indices as of 03 March 2006 Index Value Weekly change Year-to-year change BET-C 4,705.41 -0.04% +19.55% BET 7,951.09 -0.33% +26.40% BET-FI 49,454.95 +1.11% +63.18% Market capitalization as of 03 March 2006 (RON m) (EUR m) listed companies BSE 69,380.44 19,932.90 67 RASDAQ Stock Exchange www.rasd.ro Stock indices as of 03 March 2006 Index Value Weekly change Year-to-year change RASDAQ 1,736.66 -1.49% -13.44% Market capitalization as of 03 March 2006 (RON m) (EUR m) listed companies RASDAQ 8,620.22 2,476.58 3,673 Market Developments: The Bucharest Stock Exchange performed mixed with the all-stock BET-C index decreasing insignificantly by 0.04% to 4,705.41 points and the blue-chips BET index inching down 0.33% to 7,951.09 points. At the same time, the BET-FI index which monitors the performance of the five financial companies (SIFs) climbed 1.11% to 49,454.95 points. This flat trend could be considered as a consolidation, which means that a new growth is coming. However some analysts determine it as calm before the storm and they expect a down-trend in the next month. The most traded stocks last week were Transilvania Bank (BSE: TLV) and the oil companies Rompetrol Rafinare (BSE: RRC) and the OMV’s Petrom (BSE: SNP). The top-gainers were the very illiquid shares of Turism, Hoteluri, Restaurante Marea Neagra (BSE: EFO) jumping 18.64% and Chimopar (BSE: CPR) gaining 14.54% as well as the chemical company Sinteza (BSE: STZ) picking up 11.11%. The top-losers for the week were the rubber parts producer Rolast (BSE: RLS) slumping 12.79% and the chemical company Carbid-Fox (BSE: CRB) dropping 10.8%. Rasdaq Stock Exchange: On the RASDAQ market, the Rasdaq-C index closed at 1,736.66 points on Friday losing 1.49% compared to 1,762.97 points last week. Most trades took place in the wholesaler of fruits and vegetables Legume Fructe Militari (Rasdaq: LEUM), the hotel company Intercontinental Romania (Rasdaq: RCHI) and the insurer Asirom (Rasdaq: ASRA). Company and Sector News: Oil & Gas: Petrom (BSE: SNP): The oil company announced it will invest over EUR 1bn until 2010 in Arperchim and Petrobrazi refineries. This year a EUR 42m investment at Arpechim will be finalized for obtaining petrochemical products with low sulfur concentration. The project was executed by a consortium of LG International and SK&EC which also modernized the Petrobrazi refinery 2 years ago. [Ziarul Financiar]
  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 Banking & Finance SIFs: According to the Parliamentary Commission in the Chamber of Deputies debating the Draft Law approving the Government Ordinance which increased the stake cap in the capital of the five financial investment companies (SIFs), the 1% holding limit should take into account also the shares controlled by shareholders acting together. [BSE] Pharmaceuticals Zentiva (BSE: SCD): The representatives of the Czech company Zentiva declared they expect the company’s consolidated sales to exceed EUR 100m, three times higher as compared to last year. The main growing engine was the taking over of the Romanian drugs producer Sicomed (BSE: SCD), renamed to Zentiva, which posted preliminary 2005 sales of EUR 52.6m, 20% higher as compared to 2004. For 2006 Zentiva intends to introduce 12 new products on the Romanian market, after it registered sales of EUR 2m last year by introducing the Modafen drug on the Romanian market. [Ziarul Financiar] Foods Albalact (Rasdaq: ALBZ): The Rasdaq-listed dairy producer finished a EUR 2m worth investment in a new production line destined for the production of its new brand (Zuzu) of fresh dairy products. The Zuzu range includes 23 milk and yogurt products, the main target being the young consumers and families from the urban areas. Based on the development of the new brand as well as the doubling of the production capacity following a scheduled EUR 7m worth investment in a new production capacity located in Alba Iulia the company estimates sales worth EUR 30m in 2007. For the current year the management expects sales growth to continue at the same pace as in 2005 when turnover reached EUR 16.5m up 50% y/y. [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 March 2006 Index Value Weekly change Year-to-year change RTS I 1,487.11 +1.47% +108.85% RTS 2 1,705.86 +1.50% +75.25% Market capitalization as of 03 March 2006 (USD m) (EUR m) traded issues RTS 78,282.94 65,536.16 380 Moscow Interbank Currency Exchange – MICEX www.micex.com Stock indices as of 03 March 2006 Index Value Weekly change Year-to-year change MICEX 1,349.06 +0.03% +115.55% MICEX10 2,251.90 +1.80% +89.63% Market capitalization as of 03 March 2006 (RUR m) (EUR m) traded issues MICEX n.a. n.a. n.a. Market Developments: The 6-day working week for Russian market was full of interesting turns and at the end the two main stock exchanges closed on a positive territory with the RTS I index gaining 1.47% to 1,487.11 points and the MICEX index increasing insignificantly by 0.03% to 1,349.06 points. The week started with a strong rally on Sunday with the main indices climbing about 3.5-4% and the MICEX benchmark registering a historical record of 1,399.08 points. The volumes increased on Monday and the blue-chips index MICEX 10 as well as the first-tier index RTS I inched up new all-time highs. However, the remarkable rally was followed by a deep correction in the middle of the week and the market dropped about 4-5% as fast as it climbed. Fortunately, the correction was short and the market recovered in the last two days with all the indices closing higher than previous week. As usual the most traded stocks on RTS were the top 5 blue-chips: Gazprom (RTS: GAZP), LUKOil (RTS: LKOH), RAO UES (RTS: EESR), Sberbank (SBER) and Norilsk Nickel (RTS: GMKN). GAZP climbed 2.7% to USD 8.19 per share while LKOH and EESR inched up by 0.30% and 0.73% respectively. At the same time, SBER and GMKN lost accordingly 3.11% and 4.04%. Tatneft (RTS: TATN) again joined the top-gainers surging 14.50% and Uralsvyazinform (RTS: URSI) surprised with 10.38% weekly growth. Company and Sector News: Ratings UBS Investment Bank raised the forecast price of American Depository Receipts of Gazprom by 36% to USD 123.5 per share, shares of Lukoil by 7% to USD 94 and Novatek by 80% to USD 4,75, Bloomberg reported. Moreover, UBS' analysts upgraded their recommendation on Gazprom's ADR and Novatek's shares from Hold to Buy and downgraded Lukoil from Buy to Hold.
  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 Indices MICEX intends to include Gazprom's shares in the MICEX Index on March 14, the CEO of MICEX Stock Exchange Alexei Rybnikov told reporters. According to him, yesterday a meeting of the MICEX Index Committee devoted to the new structure of the MICEX Index was held. Rybnikov noted that the weighting of every issuer will be capped at 15% and the list of shares will be raised to 19. In particular, Gazprom's shares are to be included in the Index with the maximum weightage, 15%. The MICEX CEO also pointed out that the Index structure could be changed two weeks after the official statement is published about changes in the benchmark structure. Should changes be announced today, the structure will be reshaped in two week, i.e. on March 14, Rybnikov said. As of March, 14 the list of securities used for calculating the MICEX Index will be extended to include the common shares of Gazprom, Mobile TeleSystems (MTS), Uralsviazinform, RosBusinessConsulting (RBC), and the preferred shares of Transneft. In addition, the preferred shares of AvtoVAZ, Rostelecom and Tatneft are to be delisted from the MICEX Index. The above changes in the MICEX Index structure are aimed at updating and bringing the benchmark structure in line with the actual state of current market trends. According to the stock exchange's representatives, the inclusion of new securities will make it possible to expand the industry structure and diversify the benchmark into a broader basket of equity assets. [Fin-Rus.com] Banking Vneshtorgbank (VTB): The bank intends to submit the documents required for the company's IPO to the government in April, VTB CEO Andrei Kostin told reporters Wednesday. As he said, the initial public offering will definitely be launched on two stock exchanges: in Russia and most likely the London Stock Exchange. According to him, as part of the IPO a scheme will be developed, which will allow individuals to buy into VTB’s shares. Vneshtorgbank Group's assets audited to IAS topped USD 35bn as of January 1, 2006, according to preliminary estimates, the lending institution said in a press release. The Group's net profit stood at about USD 500 mln in 2005, while the existing client credit portfolio amounted to about USD 20bn. Vneshtorgbank’s CEO noted that the IPO could be postponed until Q107, if PromStroyBank’s switch to a single share with Vneshtorgbank is not wrapped up in 2006. As of October 1, 2005 the VTB’s in-house assets amounted to RUR 71.2bn (USD 2.5bn) and, taking into account its charter capital uplift by RUR 37.5bn (USD 1.3bn), the bank’s capital stands at roughly USD 3.8bn. [Fin- Rus.com] Automotive Severstal-Avto (RTS: SVAV): Core shareholder of SVAV Newdeal Investments Limited (which represents the interests of SVAV chairman Alexei Mordashov and general director Vadim Shevtsov) has sold 5% in the company. The value of the stake based on the current market price of SVAV shares amounts to USD 41m. For reference: SVAV includes Ulyanovsk Car Plant (UAZ) Zavolzhsky Engine Plant (ZMZ) and Small Car Plant (ZMA). The company was established to manage the automotive assets of the Severstal Group. According to the company's spokespersons, the shares were sold to portfolio investors which represent international investment banks. The target was to boost the company's liquidity and increase its free float. Before selling 5% in the company, the stake of Newdeal Investments Limited in the charter capital of SVAV was 63%. At present, it should be around 58%. [Fin-Rus.com] AvtoVAZ (RTS: AVAZ): AVAZ is considering the option to acquire a foreign engine producer. The Russian auto giant plans to manufacture 1.4-2.2-liter engines and for this purpose the company will either build a new facility with the capacity of 400,000-500,000 engines per year or buy a plant which halted production, and specific options in Europe and beyond its boundaries are already under consideration, AvtoVAZ CEO Igor Esipovsky said in an interview with Vedomosti business daily. According to him, there is a possible option to buy such a plant and relocate it to Togliatti. As the media wired, at the end of 2005 the Russian largest automaker was placed under the control of the management team from weapons trader Rosoboronexport. In early February the BoD approved the company's new development strategy which calls for the construction of a new 450,000 auto plant, new vehicle platforms and a renewed model mix. [Fin-Rus.com] Economy & Politics Economic growth: The Russian economy will not grow faster than 5% in the next few years unless the country's mid-term socio-economic program is implemented, head of the Economic Development and Trade Ministry German Gref said, speaking at a Cabinet meeting Thursday. [Fin-Rus.com]
  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 March 2006 Index Value Weekly change Year-to-year change ISE-100 46,366 -1.01% +67.61% ISE-30 58,480 -1.81% n.a. Market capitalization as of 03 March 2006 (USD m) (EUR m) listed companies ISE n.a. n.a. 310 Market Developments: There was an expected correction on the Istanbul Stock Exchange with the main index ISE 100 declining 1.01% to 46,366 points and the blue-chips index ISE 30 losing 1.81% to 58,480 points. The record highs from the previous week were logically followed by a profit-taking drop. On Monday the market rallied strongly and both ISE 100 and ISE 30 registered new historical records. ISE 30 pierced the psychological level of 60,000 points and ISE 100 jumped over 47,000 points for the first time. Company and Sector News: Cement Akcansa (ISE: AKCNS): AKCNS reported its 2005 IFRS consolidated financials with a net earnings figure of USD 84m. The company’s sales and EBITDA came in at USD 311m and USD 105m, respectively for the year. The BoD of AKCNS decided to distribute gross 53.9% (net 48.51%) cash dividends on March 28, 2006. The total dividend amount will be YTL 89.73m (USD 68.5m) out of a distributable income of YTL 106.5m, corresponding to a dividend yield of 4.9%. Meanwhile, Akcansa’s BoD also set a dividend policy, which stipulates distributing a minimum 50% of distributable income as a cash dividend. Glass Anadolu Cam (ISE: ANACM): ANACM announced it is to participate in the rights issue of JSC Mina, its subsidiary in Georgia, in which it holds 80.64% stake. The total amount of the rights issue will be USD 8m, with Anadolu Cam’s stake corresponding to USD 6.45m. Note that Anadolu Cam is to build a new furnace in Mina (Georgia), with a glass bottling capacity of 70K tones. The investment is projected to cost USD 19m with a completion date of July 2006. Metals Erdemir (ISE: EREGL): The Army Pension Fund (Oyak) paid USD 2.96bn to the government on Feb. 27 and took over 49.29% of EREGL. Oyak immediately installed new board members at Erdemir and its subsidiaries. Conglomerates Koc Holding (ISE: KCHOL): Koc Holding has announced its 2005 consolidated revenues and EBITDA (financial and industrial) as USD 18.8bn (up by 13% YoY) and USD 1.51bn (up by 10% YoY). The holding foresees consolidated revenues rising by 91% YoY to USD 36.0bn in 2006 and EBITDA (financial and industrial) by 100% to USD 3.0bn. The 2006 increases are largely one-off due to the Tupras and Yapi Kredi acquisitions.
  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 UKRAINE PFTS Stock Trading System www.pfts.com Stock indices as of 03 March 2006 Index Value Weekly change Year-to-year change PFTS 432.83 +3.92% +35.87% Market capitalization as of 03 March 2006 (USD m) (EUR m) listed companies PFTS 35,197.65 29,466.43 268 Market Developments: The Ukrainian stock market keeps on its boom with the PFTS index climbing 3.92% to 432.83 points and reaching the impressive YTD growth of 22.63%. Up to Wednesday the index registered 3 consecutive historical records going beyond 430 points. After a short correction on Thursday in the last day the investors’ activity turned the PFTS up again and increased the turnover. However some analysts expect a downward correction because they think the market boom has drawn some of the companies to overpriced levels. The most-traded stocks were the iron ore-processing company Poltava GOK (PFTS: PGOK), Nizhnodniprovsky Pipe Rolling Works (PFTS: NITR) and the producer of equipment for oil, gas and chemical industries Sumy NVO Frunze (PFTS: SMASH). The largest traded volume took place in PGOK (USD 5.59m) mainly on the news of the forthcoming capital increase (see below). PGOK inched up 0.74% while SMASH gained 5.26% with USD 2.88m turnover. At the same time the more illiquid NITR surged 15.6% with traded volume of USD 2.18m. Company and Sector News: Oil & Gas Ukrnafta (PFTS: UNAF): Ukrnafta announced that the company has finished 2005 with net profit of UAH 1.87bn, which represents a 39% increase y-o-y. These strong profits were driven by a 28% increase in the company’s net sales from UAH 4.4bn in 2004 to UAH 5.6bn in 2005. Ukrnafta’s top line grew in 2005 on the back of a 3.1% increase in its oil and gas condensate production and booming oil prices. On Tuesday UNAF announced that it wants to acquire a gas production license for the Sakhalin oil & gas field in Kharkov region (eastern Ukraine). According to the press release, the company has invested UAH 380m in developing this field, yet is unable to capitalize on its investments because it does not have a production license. The field is currently operated by Poltavanaftogazgeologiya, a subsidiary of Nadra Ukrainy, the State-owned prospecting company. Automotive Lutsk Automobile Plant (PFTS: LUAZ): The company that manages LUAZ, Bogdan Corporation, has created a joint venture with the Japan’s Isuzu Motors and Sojitz Holdings. The newly incorporated Isuzu Ukraine Automobile Company will specialize in marketing buses and light trucks assembled by the Bogdan group of companies (including LUAZ) in Ukraine and in expanding their exports under the Isuzu brand into Russian and other CIS markets, as stipulated in the signed joint venture agreement. Bogdan Corporation will hold a 50% stake in the USD 4.4m share capital of the new company, while Isuzu Motors and Sojitz Holdings will each hold 30% and 20% respectively. In 2005, Isuzu supplied to the companies of the Bogdan group 3,123 knocked-down kits of Isuzu trucks and buses. Isuzu Ukraine Automobile Company plans to increase annual sales of Isuzu vehicles in Ukraine and CIS to 20,000 units in the next two-three years. The creation of Isuzu Ukraine Automobile Company was expected, since Bogdan Corporation, Isuzu Motors and Sojitz Holdings signed a preliminary protocol on July 20, 2005.
  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 Energy Dniproenergo (PFTS: DNEN): DNEN has reported strong operating and financial results for the full-year 2005. The Company exceeded its 2004 electricity production by 1.3% and finished 2005 with 13.2 KWh in power output. This combined with its electricity tariff appreciation, pushed DNEN’s Net Sales up by 20% from UAH 1.7bn in 2004 to UAH 2.1bn in 2005. The Company’s gross margin fell from 19% in 2004 to 17% in 2005 as a result of an estimated 35% increase in the price of coal in Ukraine (DNEN’s main fuel), as well as a 50% rise in the transportation tariff in 2005. However, a UAH 34m Other Operating Income, versus a UAH 30m Other Operating Loss in 2004, helped DNEN to improve its profitability, as its EBITDA grew by 28% from UAH 262m in 2004 to UAH 336m in 2005, while the EBITDA margin improved from 15% in 2004 to 16% in 2005. As the depreciation expense rose only by 4% y-o-y to UAH 195m in 2005, DNEN’s operating margin strengthened by 3 percentage points y-o-y to 7%. As a result, DNEN’s EBT showed a remarkable improvement of 113%, as it jumped from UAH 61m in 2004 to UAH 131m in 2005. Unfortunately, an excessively high tax payment of UAH 106m (81% of the 2005 EBT) eroded DNEN’s robust 2005 financial performance, leaving it with net profit of UAH 24m, which yields a net margin of 1.1%. Nevertheless, this is still quite an improvement from a UAH 34m Net Loss the Company posted for 2004. Ore-mining Poltava GOK (PFTS: PGOK): PGOK will raise its share capital by 5% in April - At the AGM on February 28, the ore-dressing company PGOK’s shareholders decided to raise the Company’s share capital by 4.9% to UAH 1.1bn. The share emission will begin on April 10 and end on April 26, 2006. All new shares will be issued at the nominal price of UAH 9.96, which is 86% below its last market price of UAH 70 a share. [Interfax]

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