Major shareholders expect MOL to revise its offer upwards

On the Zagreb Stock Exchange, analysts expect stagnation in stock prices today, and only potential new news related to the INA stock could attract investors’ attention. Speculations regarding OMV’s involvement in the further privatization process of INA received a ‘final point’ yesterday.

All 8 analysts from brokerage firms who participated in Hina’s survey expect the continuation of stagnation in Crobex. The Crobex index weakened by 0.1 percent yesterday, to 3,487 points. Regular trading volume was below 22 million kuna."I think we are close to the bottom of the market. Prices could either continue to stagnate for a while longer or finally start to rise, but their growth will likely be healthy and moderate rather than explosive," says Damir Bićanić, Deputy Executive Director for Investment Banking at Hypo Alpe Adria Group.

INA’s stock closed trading yesterday at 2,820 kuna, što is 0.64 percent higher than the previous day. During trading, it even touched 2,869 kuna."The price of INA’s stock above the level of 2,800 kuna that MOL offers in the public offer suggests that some major shareholders expect the Hungarian company to revise its offer upwards," says Bićanić.

OMV seeks a transparent privatization process, meaning the opportunity to first participate in the tender for acquiring a 19.85 percent state stake in INA, and only then would it be ready for a public offer. However, Deputy Prime Minister Damir Polančec stated that the government has not invited MOL, nor should it invite anyone else to submit a public offer for INA shares. Anyone who wants, has the strength and will can participate in the transparent public offer process, and whoever offers a higher price will be the winner, said Polančec.

"The government’s goal in this round of INA privatization is clearly not to maximize profits for the state and other shareholders, but rather other strategic decisions, such as controlling fuel prices, building a new gas pipeline, and others, which it plans to push through MOL," says Bićanić. The inclusion of OMV would be good for the domestic stock market and excellent for INA shareholders, as they could achieve a higher price for the shares they own, believes Bićanić. "The government, on the other hand, has other options available regarding controlling fuel prices and developing the oil industry in Croatia, primarily through the liberalization of the oil market," emphasizes Bićanić.

Analysts in Hina’s survey indicate that they expect the focus of investors to be typically on the most liquid issues – shares of INA, T-HT, and certain construction and shipping companies. The Baltic Dry Index (BDI) fell nearly five percent yesterday, to 6,146 points. Some analysts expect a continued greater focus of market participants on Dioki’s stock, after it was proposed to the government working group as a location for the construction of the LNG terminal Dina on the island of Krk in the municipality of Omišalj, owned by that company.

Polančec stated yesterday that a final decision on the terminal’s location should be made by the end of the year. During the same period, relations within the Adria LNG consortium should be arranged, with the condition that the Croatian share in that consortium be 25 percent. Dioki’s stock price strengthened by 0.4 percent yesterday, to 500 kuna, and at one point reached 542 kuna. Analysts assess that the news about the selection of Dina as the location for the LNG terminal is mostly already factored into its price.

Some analysts also point out that greater investor interest could be attracted by Vira’s stock due to the announcement that it will process nearly 500 thousand tons of sugar beets in this year’s campaign, from which it plans to produce more than 60 thousand tons of crystal sugar, which should positively reflect on their business after a somewhat worse than expected semi-annual financial result. (H)