Agrokor’s Acquisition of Mercator in Focus of Investors

Today, stagnation of stock prices is expected on the Zagreb Stock Exchange with a positive sign, primarily due to the rise of the most important global indices, and the focus of investors will be on news related to the construction sector.

Of the nine analysts from brokerage firms who participated in Hina’s survey, five expect stagnation of the Crobex today, three expect an increase, and one expects a decline. The Crobex index fell by 0.14 percent yesterday, to 2,140 points. The Crobex10 weakened by 0.41 percent, to 1,134 points. Regular trading in shares amounted to 15.2 million kuna, which is 24 million less than the previous day. “I expect a slight increase in domestic stock indices today, primarily due to positive signals from global markets. The focus of investors will be on all news related to the unraveling of the story about the bank guarantees that the domestic construction consortium submitted to the Montenegrin authorities this week,” says Maja Bešević, an analyst from the brokerage firm Abacus Brokers.

The Croatian Financial Services Supervisory Agency (Hanfa) ordered the Zagreb Stock Exchange yesterday afternoon to temporarily suspend trading in the shares of the Institute IGH and Tehnika until the public is accurately informed about the delivery of bank guarantees to the Montenegrin authorities, necessary for concluding the contract for the construction of the Boljari-Bar highway. According to the latest information, the quality of the bank guarantees from the Croatian consortium for the construction of the Bar – Boljare highway will be assessed by the Commission for the Implementation of the Tender Procedure and Negotiation by February 28. This was stated yesterday by the chairman of that commission, Zoran Radonjić, refusing any further comment until the Government of Montenegro provides its assessment. “The negative correction in the past two days on the shares of construction companies has likely already factored in the newly arisen uncertainty into their prices. Therefore, we expect stabilization of construction stock prices,” emphasizes Nada Harambašić, chief financial analyst at Raiffeisen Consulting. Support for the domestic market comes from global exchanges, where stock prices are rising, thanks to the promise of EU leaders to help Greece resolve its financial problems.

“On the domestic market, we expect trading in slight positive territory, or stagnation of the Crobex. Yesterday’s better-than-expected news about unemployment in the US market and the reduction of uncertainty around Greek debt resulted in positive signs for US indices. In Europe, stock prices are also rising this morning,” emphasizes Nada Harambašić. However, she adds that low trading volumes are expected to continue on the domestic market, so there is a possibility that the Crobex will not follow trends on global exchanges today and may record stagnation with a negative sign. On the global shipping market, demand has been weakening in recent days, ahead of the start of the Chinese New Year on Sunday. Yesterday, the Baltic Dry Index (BDI) weakened by 55 points, to 2,575 points. “The BDI index is sliding down due to the decline in demand from Chinese importers ahead of the Chinese New Year. Since it lasts for a week, a continuation of the BDI’s decline is likely next week,” says Bešević. Behind this, the movement of the BDI will be most influenced by the outcome of negotiations between the Chinese government and three leading global mining companies regarding the prices of iron ore deliveries for the next year. Mining companies are demanding a price increase of 30 percent, while the Chinese government agrees to a 20 percent increase, notes Bešević.

Among domestic news, analysts at Erste Bank have raised the target price of T-HT shares from 300 to 310 kuna, but at the same time lowered the recommendation for the stock from ‘accumulate’ to ‘hold’, as the stock price is moving in a range from 0 to plus 10 percent relative to the target price. Given the strong rise in T-HT’s stock price in recent months, there is not enough potential for further growth from these levels, say Erste Bank analysts, noting that in the last quarter of last year, they expect further declines in revenue and EBITDA compared to the previous quarter. Erste Bank analysts expect T-HT’s revenue to decline by 7.5 percent year-on-year in the fourth quarter due to the recession, which leads consumers to use telecommunications services less and also causes greater price sensitivity. Additionally, the company’s revenues are negatively impacted by the introduction of a 6 percent excise tax on mobile services. Erste Bank analysts expect a decline in T-HT’s EBITDA of 19.6 percent in that quarter compared to the same quarter in 2008.

Harambašić says that the shares of INA could also be in focus for investors today, due to the announcement of business results for the last quarter of last year. A slightly higher interest from investors is also possible again for shares of companies within Agrokor, should there be new news about the offer to purchase the Slovenian Mercator. It was recently reported that the CEO of Nova Ljubljanska Banka (NLB), Božo Jašović, assessed that the offers for the purchase of shares of Nova Ljubljanska Banka (NLB) and Banka Celje in Mercator are not such that they would be thrilled by them. Among domestic news, it is also highlighted that media today report unofficial data indicating that in January more than 17,000 workers lost their jobs, and the number of unemployed reached around 309,000. The Croatian Employment Service is expected to publish official unemployment data in the coming days.

If the media data aligns with the figures from the CES, this represents an acceleration in the growth of unemployment, considering that in December about 8,600 workers lost their jobs. This would also be a larger jump in unemployment than expected. Six macroeconomists surveyed by Hina estimated that in the first month of this year, between 8,000 and 17,000 workers lost their jobs. On average, they expected an increase in the number of unemployed by 10,800. Given this, a strong jump in the unemployment rate is also expected. In Hina’s survey, six macroeconomists estimate that the unemployment rate has reached between 17 and 17.5 percent. On average, they expect it to be 17.3 percent. (H)