SEE ECONOMIC RESEARCH
18-Apr-2013
Croatia Capital Market Bi-Weekly
CNB safeguards kuna
MARKET HIGHLIGHTS AND SHORT-TERM OUTLOOK
Given contained inflation outlook and stable FX, the CNB continued to
provide ample kuna liquidity via HRK3.4bn-worth conversion from a
$1.5bn Eurobond issued last month. The conditional nature of such
credit support measures is also reaffirmed by immediate EUR215m
CNB FX reserve sales in response to unwanted EUR/HRK volatility
above 7.62. The latter was not only driven by a more front-loaded
conversion of Eurobond receipts than during last few issues, but also
that the CNB firm tone on provisioning rules. All that confirms our
monetary policy views that while the CNB stands ready to fight activity,
de-leveraging and funding cost concerns, they will tread cautiously to
the extent allowed by FX stability and fiscal risks mitigation. We think
the tendency for dovishness will be enhanced by the recent CNB 2013
GDP forecast downgrade (to -0.9% from 0.3%; HAAB 2013e: -2.0%)
and fiscal risks' mitigation thanks to abundant global liquidity and
Ecofin EDP's fiscal monitoring essentially functioning as a sort of IMF
program. In the near term, we see the EUR/HRK within 7.57-7.65 area,
with banks' FC demand for risk provisioning, deteriorated goods trade
trends and private sector's (external) de-leveraging the key HRK
negatives. In case of abrupt EUR/HRK rise (200 pips+), we would
expect the CNB to withdraw the full amount of newly-created liquidity.
Beyond the CNB, the key factor limiting the EUR/HRK upside is INA's
$400m loan, o/w part would be used for local research and
investments.
EUR/HRK rises to multi-year highs
7,68
7,60
7,53
7,45
7,38
7,30
7,23
7,15
Source: CNB, HAAB research
READ US ON BLOOMBERG AT HAAB5<GO>
Recent Reports
Date
Croatia Macroeconomic Outlook
26-Mar-13
SEE Quarterly Outlook
26-Mar-13
March Inflation Portrays Consumer Weakness
16-Apr-13
Adris Group Company Report
21-Dec-12
Ericsson NT Company Report
25-Jan-13
FX levels
EUR/HRK
USD/HRK
CHF/HRK
Level
7,6145
5,8382
6,2642
2W Δ (%)
0,07%
-1,56%
0,01%
YTD Δ (%)
0,85%
1,99%
0,18%
Zibor rates
O/N
T/N
1W
3M
Level (%)
0,30
0,30
0,40
1,10
2W Δ (bp) YTD Δ (bp)
-30,0
-60,0
-60,0
-30,0
-30,0
-60,0
-60,0
-15,0
Bonds
RHMF 2017
RHMF 2022
USD 2017
USD 2021
Ask YTM (%)
3,794
4,552
3,342
4,533
2W Δ (bp) YTD Δ (bp)
-18,6
-40,0
-16,3
-8,1
-32,1
-71,1
-36,8
21,9
Spreads
RHMF 17
RHMF 22
USD 2017
USD 2021
5Y CDS
Level (bp)
319,7
329,3
280,1
323,1
307,6
2W Δ (bp) YTD Δ (bp)
-16,0
-30,8
-11,5
4,2
-70,1
-24,3
-28,1
35,0
-19,1
52,2
Indices
CROBEX
BELEX15
SASX-10
BIRS
SBITOP
MONEX20
DJS BALKAN 50
S&P500
DAX
Level (pts)
1.955,9
569,5
795,4
788,0
600,9
9.763,1
491,2
1.547,2
7.487,1
2W Δ (%)
-1,7
-2,7
1,7
-0,5
1,5
2,1
1,8
-0,8
-4,2
YTD Δ (%)
12,4
8,7
4,6
-2,4
-5,4
-0,9
2,6
8,5
-1,6
Price (HRK)
Shares
T-HT
214,5
INA
4.300,0
Ericsson NT
1.500,0
Adris (preference)
285,0
Atlantic Group
681,0
Podravka
275,0
2W Δ (%)
-1,0
2,6
-4,6
-2,9
-0,5
-1,6
YTD Δ (%)
8,0
9,7
8,8
14,9
27,1
14,6
7,08
Nov-04 Nov-05 Dec-06 Jan-08 Jan-09 Feb-10 Mar-11 Mar-12 Apr-13
Source: HYPO Fixing, Reuters, Bloomberg
Analysts:
Even if the CNB squeezes more liquidity out of the system, we still see
the short-end kuna rates as low given the remaining HRK5.5bn excess
liquidity in the system and the CNB's 25bp cut to O/N depo rate to 0%.
Due to the latter, we have slightly revised our yield forecasts
downwards. On longer-dated yields, we see opportunity for tactical
longs in Croatian USD bonds, with Croatia's stable BB+ outlook due to
the looming EU rule-based policy anchor, political stability and nonimminent return to foreign markets before pre-financing for 2014 needs
(thanks to ample liquidity locally). Besides, Croatian USD spreads still
show 40bp underperformance relative to Romanian from end-January's
Moody's rating downgrade given the ongoing market volatility on
prolonged EMU peripherals' concerns.
Hrvoje Stojic (economics, money market, strategy)
[email protected]
+385 (1) 603 0509
Boris Mazurin (capital markets, banks)
[email protected]
+385 (1) 603 1848
Andrej Knez (economics, money market, strategy)
[email protected]
+385 (1) 603 2143
Ana Vitaic Gladovic (capital markets, banks)
[email protected] +385 (1) 603 3267
SEE THE DISCLOSURES APPENDIX FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION
Croatia Capital Market Bi-Weekly
MARKET HIGHLIGHTS AND SHORT-TERM OUTLOOK
On Monday, all three major US indices suffered their sharpest one-day
drops this year, following a batch of weaker-than-expected earnings
and as commodities resumed their sell-off amid ongoing worries over
global growth. With the last declines, US stocks are on pace for their
biggest weekly losses in 2013. Negative sentiment also prevailed on
ZSE where local benchmark Crobex lost 2.2% in the last two weeks on
a very low average equity daily turnover, below HRK10m. Short term
liquidity boost only came from the announcement of the Croatian
government to invite bids for privatization of Croatia osiguranje and
Hrvatska postanska banka until the end of April/beginning of May. In
the next two weeks local 1Q13 earnings season will kick off with a peak
on 30 April when most of the blue chips will disclose results. As we
said before, we expect to see further deterioration in operating
profitability on lower sales revenues, less space for cost cutting and
rising financing costs after S&P and Moody’s downgrade to a junk
status. Also, we expect to see corporate sector in further de-leveraging
mode due to balance sheet cleaning and weak economic prospects.
CROBEX
outperformed regional peers ytd (%)
18
15
12
9
6
Source: Bloomberg
3
0
-3
-6
-9
.
Crobex Belex 15 SBITOP SASX-10 DJ BAL.
50
PX
WIG
BUX
SEE THE DISCLOSURES APPENDIX FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION
Croatia Capital Market Bi-Weekly
ECONOMIC HIGHLIGHTS
State budget revenues
undershoot continues
The Q1 state budget revenue undershoot by 4% relative to plan largely owes to suboptimal ~6%
yoy VAT intake given that favourable base effects, zero VAT rate hike to 5% and better tax
discipline should have all seen VAT intake growth in low-to-mid teens. The rationale is that
endeavours to contain fiscal slippage are largely tax-oriented, which in the absence of supply-side
reforms is self-defeating as it dumps both capex and private consumption, and finally narrows the
tax base. There are also apparent slippages in the planned HRK2.3bn (0.7pp/GDP) public wage
cuts, which anyhow can't offset soaring interest costs and restructuring charges. Non-existent fiscal
consolidation has in fact brought interest costs to levels where they sooner or later offset savings
on state subsidies to recently privatized ailing industries. All said, we see 2013's fiscal gap at just
below 6% of GDP, which alongside the sovereign's 16%/GDP funding needs leaves the public debt
(incl guarantees and the CBRD) on an unsustainable path above 80% of GDP in 2014.
March CPI inflation
portrays consumer
weakness
March CPI inflation rose 0.3% mom for a 1.2pp lower 3.7% yoy print with base effects having the
key role in annual disinflation. Despite Easter holidays, food prices fell on a mom basis largely due
to lower meat prices, and post-sales rebound in clothing prices is smaller than a year ago,
portraying changing citizens' spending habits towards non-discretionary items. With high base
effects and deflationary forces of domestic demand weakness, we see CPI inflation towards 2% in
the rest of 2013 (on average). Following a zero VAT rate hike to 5%, disinflation is still curbed by
energy/tobacco excise rate hikes and more energy price adjustments towards market levels. All in
and assuming broadly stable kuna, we see 2013 CPI average at 3% (vs 3.4% in 2012), with upside
risks in case of indirect tax hikes to limit fiscal slippage.
Retail sales below
expectations in
February, outlook
remains bleak
February's real retail sales (-7.2% yoy, prev -5.3%) exceeded expectations (HINA cons -5.2%),
with the sharpest decline in car sales (-46.6% yoy) since late 2009 due to high base from 2M12's
corporate car purchase front-loading. Media reports show the ongoing albeit slowing decline in car
sales (-36% yoy in March), leaving retail sales deeply in the red. While another good tourist season
supports spending, retail trade outlook in general remains bleak given the ongoing demand hurdles
and the public sector's fleet renewal only in 4Q13-1Q14. Households' expenditure is hit by the need
to fundamentally reform too generous entitlements, labour/product markets and the bloated public
sector. Moreover, unemployment will top 17% this year (on average) as part of ongoing corporate
restructuring.
CPI inflation slows further in March
Real retail sales fall more than expected (yoy)
8
Transport
7
110
Housing & utilities
6
Clothing & footwear
5
Food and beverages
105
100
4
3
95
2
90
1
0
-1
85
Source: CBS, HAAB research
Source: CBS, HAAB Research
-2
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Private sector's deleveraging deepens
80
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
Broad money M4 growth speeded up to 2.9% yoy in February (prev. 2.7%) on money supply M1
(3.6%) from a low base. We expect M4 growth to slow due to households’ disposable income
reduction, while corporate savings capacities are dented by weak profit prospects, prolonged
restructuring and external debt repayments. Meanwhile, private sector credit dropped 6.9% yoy in
FX-adjusted terms (prev. -6.5%) largely on banks’ balance sheet downsizing and ongoing private
de-leveraging. Despite the CNB's cut of O/N deposit rate to 0%, we think private sector's deleveraging will continue given corporate pre-bankruptcy settlements, funding cost spikes given the
rating downgrades feedback loop, and the planned tightening of bank NPL cover requirements.
Besides, persistently rising unemployment and entitlement rationalization remain the main brake on
households’ demand.
SEE THE DISCLOSURES APPENDIX FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION
Croatia Capital Market Bi-Weekly
EQUITY HIGHLIGHTS
The Croatian government plans to invite bids for the privatization of majority state-owned insurer
Croatia Osiguranje (CO) and Hrvatska Postanska Banka (HPB) until the beginning of May. The
most recent deal in the European insurance sector was acquisition of Turkey Yapi Kredi Sigorta by
Allianz SE for EUR684m. The acquisition multiple is quite high at 4.41x BV relative to median
transaction multiple for European insurers in the last 12 months (0.8x BV). However, that came as
no surprise to us given the high premium growth in Turkey (16% in 2012), while premiums in the
SEE region deteriorated. The aforementioned median transaction BV multiple indicates HRK1.6bn
of the implied value, i.e. HRK800m for planned 50% share of CO. Also, current market BV of CEE
banks is 0.55x indicating the implied current market value of HRK770m (or ~HRK400m for 51.46%
HPB share). With that said, the government could collect around HRK1.2bn, quite below planned
HRK2.0bn. Meanwhile, the Triglav's CEO Rakovec confirmed interest in acquiring CO after
revealing Group’s intentions to buy CO and Serbian insurance company DDOR a month ago.
Despite its advantage as strategic investor and recent arrangement with the IFC worth EUR25m,
we think this scenario is unlikely given the possible participation in ABanka recapitalization of
planned EUR90m, uncertainties over privatization process in Slovenia and lastly announced
dividend payout of EUR1 per share (in total almost EUR23m). Also, according to the latest news,
the EBRD is interested in gaining the ownership in two state-owned companies and is currently in
negotiations with potential strategic partners.
The bids for the
privatization of CO and
HPB in May...
Acqusition multiples within European insurance
sector (x)
20
CROS's GWP and profitability decreased in 2012
(HRKm)
19,7
3500
17,2
18
16,3
3240
3160
2011
3000
16
2012
Source: Bloomberg
2500
14
12
2000
10
8
1500
6
1000
Source: Company data
4
1,6
2
0,8
500
158
0,3
0
155
0
Net Income
FCF
INA signed USD400mworth loan...
PTKM ensured more
favourable gas supply
conditions...
EBIT
EV
BV
Total Assets
Gross written premium
Profit before tax
INA Group signed USD400m-worth L-T multicurrency revolving credit facility agreement to push
ahead with plans to boost long-term growth. The syndicate loan has a 3-year maturity with a
possible 2-year extension, with interest rate Libor/Euribor (depending on currency) plus 3.75%. A
quarter of loan is aimed for refinancing of maturing USD750m-worth loan, while 60% company
plans to invest in upstream operations with regards to the announced capex for 2013 in amount of
USD212m. The remaining part of loan will go for further development of retail network. In addition,
INA has signed an intragroup L-T loan agreement with MOL Group by which intragroup financing
increased by USD100m to USD 300m. Current Net debt/EBITDA of INA Group is 1.86x which is
quite above peer group net debt/EBITDA ratio (1.0x).
Meanwhile, INA Prirodni plin has signed an amendment to its gas supply contract with
Petrokemija (PTKM) extending the deal until the end-2014. The two companies have agreed more
flexible quantities and prices in accordance with current European market conditions. To remind, at
end-2011 INA Prirodni plin signed 2-year contract with PTKM, whereby PTKM is obliged to
arranged 80% of its gas needs with INA Prirodni plin while the rest can be arrange with most
favourable supplier on free market. Apparently Gazprom's entrance intensified price competition on
Croatian gas market, after winning on PTKM's tender for 130 million m3. For sure, this amendment
is of high importance for PTKM as gas expenditures accounted for 90% of sales in 2012 (81% in
2011). We expect to see improved profitability of PTKM in 2013 after HRK184.7m pre-tax loss in
FY12, since revised conditions are effective as of January 2013. Also, in the mid term PTKM will
additionally reap the benefit of liberalised gas market, which will significantly improve profitability of
the company.
SEE THE DISCLOSURES APPENDIX FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION
Croatia Capital Market Bi-Weekly
SELECTED ECONOMIC FORECASTS
Real GDP
(yoy, %)
Country
Slovenia
Croatia
Serbia
Bosnia and
Herzegovina
Montenegro
CPI
Unemployinflation
ment rate
(avg, yoy,
(ILO, %)
%)
Budget
balance
(%/GDP)
Public
debt
(%/GDP)
Export of
goods &
services
(EURbn)
Import of
goods &
services
(EURbn)
C/A
(%/GDP)
External
debt
(%/GDP)
EUR/local
currency
(avg)*
0,0
111,2
1,39
-25,2
2,3
115,1
1,29
-25,2
4,1
118,1
1,30
-26,1
4,0
119,2
1,26
18,8
-18,7
-0,9
103,0
7,43
69,9
19,1
-18,7
0,1
102,3
7,52
-5,8
74,9
19,0
-18,3
0,5
102,6
7,56
2,8
-5,3
79,5
19,6
-19,1
0,3
102,0
7,60
11,0
-5,0
52,8
11,5
-16,6
-9,1
76,6
101,95
-6,4
65,3
11,9
-17,2
-10,5
86,7
113,00
-5,3
65,8
12,8
-17,7
-8,4
86,1
114,03
-4,2
65,9
13,7
-18,5
-7,5
84,2
119,44
3,7
-2,9
40,7
4,1
-7,3
-9,5
49,4
1,96
29,6
2,1
-3,3
44,4
4,0
-7,3
-9,5
52,5
1,96
-1,3
30,8
2,0
-2,6
46,2
4,0
-7,2
-8,8
52,7
1,96
2014F
0,8
30,2
3,0
-2,4
46,9
4,2
-7,4
-8,4
52,4
1,96
2011
3,2
19,7
3,3
-5,4
45,9
1,4
-2,1
-17,7
99,9
1,39
2012
0,0
20,0
4,0
-4,2
52,5
1,4
-2,2
-17,5
102,2
1,29
2013F
0,4
21,0
2,4
-3,6
54,6
1,4
-2,2
-16,9
107,9
1,30
2014F
1,2
20,7
2,9
-3,0
53,6
1,5
-2,3
-16,0
107,0
1,26
46,9
26,1
-4,4
54,1
26,5
-7,0
71,1
27,1
2,2
-4,7
77,2
28,0
13,5
2,3
-5,5
65,4
-2,0
15,8
3,4
-4,6
2013F
-2,0
17,3
3,0
2014F
0,3
18,1
2011
1,6
23,0
2012
-1,7
24,0
7,8
2013F
0,7
25,5
10,0
2014F
1,5
24,5
7,0
2011
1,0
27,6
2012
-1,8
2013F
2011
0,6
2012
-2,3
2013F
-2,2
2014F
0,6
2011
8,2
1,8
-6,4
9,0
2,6
10,0
2,3
10,3
0,0
2012
-25,7
* for Slovenia and Montenegro EUR/USD; ** under review; bold figures signal upward revisions; bold, underlined figures signal downward revisions
SELECTED FX&IR FORECASTS
current
Jun-13
Sep-13
Dec-13
Mar-14
EUR/HRK
7,61
7,49
7,54
7,60
7,62
1W ZIBOR
0,31
0,70
0,80
0,60
0,80
1M ZIBOR
0,39
0,80
0,90
0,70
0,90
3M ZIBOR
0,73
1,20
1,20
1,40
1,70
12M T-bill
2,55
2,20
2,20
2,40
2,80
Release
Period
Units
Previous
KEY EVENTS IN THE NEXT TWO WEEKS
Date
23-Apr-2013
Wages
February
HRK
5,529
30-Apr-2013
Industrial Production
March
mom/yoy
-2.9%/-4.0%
30-Apr-2013
M4
March
mom/yoy
0.0%/2.9%
Date of Release
Recommendation
Target Price
Price on Release Date
T-HT (HT-R-A)
14.02.2013
UNDER REVIEW
N/A
HRK 216
INA Group (INA-R-A)
21.12.2012
SELL
HRK 3,158
HRK 3,999
Ericsson NT (ERNT-R-A)
25.01.2013
REDUCE
HRK 1,204
HRK 1,489
Adris Group (ADRS-R-A)
31.01.2013
HOLD
HRK 293
HRK 309
Adris Group (ADRS-P-A)
31.01.2013
ADD
HRK 325
HRK 286
Atlantic Group (ATGR-R-A)
22.02.2013
UNDER REVIEW
N/A
HRK 661
Podravka (PODR-R-A)
13.02.2013
UNDER REVIEW
N/A
HRK 275
EQUITY RESEARCH RECOMMENDATIONS
Company
SEE THE DISCLOSURES APPENDIX FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION
Croatia Capital Market Bi-Weekly
Disclosures Appendix
The information and opinions in this report/investment research were prepared by Hypo Alpe-Adria-Bank d.d. and/or one or more of its subsidiaries/affiliates
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herein may fluctuate in price and value. Past performance is not indicative of future results. Besides, the risks associated with an investment in the financial,
money market or investment instrument or security under discussion are not explained in their entirety. Estimates of future performance are based on
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POTENTIAL CONFLICTS OF INTEREST
Disclosures of interest and conflicts of interest relating to Hypo Alpe-Adria-Bank and/or affiliate with respecto to the analyzed company, financial instruments
and/or securities forming the subject to this document ar valid as of the end of the month prior to publication of this document*:
HT 6.; Viadukt 6.; Tehnika 6.; Belje 6; Agrokor 8
1. Hypo Alpe-Adria-Bank and/or affiliate (pursuant to relevant domestic law) owns at least 1% of the company's share capital.
2. The analyzed company owns more than 1% of the issued share capital of Hypo Alpe-Adria-Bank and/or affiliate (pursuant to relevant domestic law).
3. Hypo Alpe-Adria-Bank and/or affiliate (pursuant to relevant domestic law) administers the securities of the analyzed company by quoting bid and ask prices
(i.e. acts as a market maker or liquidity provider in the securities of the analyzed company)
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preceding this publication
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publication, in return for which the Bank received a consideration or promise of consideration.
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7. The research analyst(s) are on the supervisory/management board of the company they cover.
8. Hypo Alpe-Adria-Bank and/or affiliate extended significant amount of credit facilities to the analyzed company.
9. The research analyst(s) have received or bought securities of the analyzed company before the launch of public offering of the company
* Updating this information may take up to five working days after month end.
EQUITY RECOMMENDATION DEFINITIONS, VALUATION METHODS AND PRINCIPLES
Readers may find the history of changes to recommendation definitions on our website: http://www.hypo-alpe-adria.com under the heading 'Economic
Research / Disclaimer'.
We currently use a five-tier recommendation system for the stocks in our formal coverage: Buy, Add, Hold, Reduce or Sell (see definitions below):
Buy: Expected total return (including dividends) of at least 20% over a 12-month period;
Add: Expected total return (including dividends) of 10% to 20% over a 12-month period;
Hold: Expected total return (including dividends) of -10% to 10% over a 12-month period;
Reduce: Expected total return (including dividends) of -20% to -10% over a 12-month period;
Sell: Expected total return (including dividends) of -20% or worse over a 12-month period;
Research published prior to 31/12/2008 were based on the followingthree-tier recommendation system:
Buy: Expected total return (including dividends) of 15% or more over a 12-month period; Hold: Expected total return (including dividends) between -15% and
15% over a 12-month period; Sell: Expected total return (including dividends) of -15% or worse over a 12-month period.
We use two other categorizations for stocks in our coverage:
Restricted: The coverage of the company has been suspended temporarily due to market events that make coverage impracticable or to comply with
applicable regulations and/or firm policies in certain circumstances including where Hypo Alpe-Adria Bank is acting as an advisor in a merger or strategic
transaction involving the company.
Under review: Financial forecasts and/or target are not disclosed owing to circumstances such as changes in the research team and other market events that
require additional efforts to determine the value of the company based on the used valuation methods.
Our company valuations are based on but not limited to the following valuation methods: Multiple-based models (P/E, P/cash flow, EV/sales, EV/EBIT,
EV/EBITA, EV/EBITDA, etc.), peer-group comparisons, historical valuation approaches (e.g acquisition multiple comparisons), discount models (DCF, DVMA,
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We use two other categorizations for stocks in our coverage:
Restricted: The coverage of the company has been suspended temporarily due to market events that make coverage impracticable or to comply with
applicable regulations and/or firm policies in certain circumstances including where Hypo Alpe-Adria Bank is acting as an advisor in a merger or strategic
transaction involving the company.
Under review: Financial forecasts and/or target are not disclosed owing to circumstances such as changes in the research team and other market events that
require additional efforts to determine the value of the company based on the used valuation methods.
Our company valuations are based on but not limited to the following valuation methods: Multiple-based models (P/E, P/cash flow, EV/sales, EV/EBIT,
EV/EBITA, EV/EBITDA, etc.), peer-group comparisons, historical valuation approaches (e.g acquisition multiple comparisons), discount models (DCF, DVMA,
DDM), break-up value approaches or asset-based evaluation methods. Furthermore, recommendations may be also based on the Economic profit approach.
Although the definition and application of these methods are based on generally accepted industry practices and models developed in the financial economics
literature, please note that there is a range of reasonable variations within these models. Valuation models are dependent on macroeconomic factors, such as
interest rates, exchange rates, commodities, and on assumptions about the economy that are subject to uncertainty and also may change over time. Any
valuation is dependent upon inputs that are based on the subjective opinion of the analysts carrying out this valuation. Investors and other recepients of this
research may request further information and details with respect to the valuation models or assumptions applied to the models. Furthermore, market
sentiment and the overall liquidity situation affect the valuation of companies. The valuation is also based on expectations that might change rapidly and
without notice, depending on industry-specific developments. Our recommendations and target prices derived from the models might consequently change
accordingly. Recommendations generally relate to a 12-month horizon. They are, however, also subject to market conditions and can only represent a
snapshot. The ratings may in fact be achieved more quickly or slowly than expected, or need to be revised upward or downward.
This report may include research based on technical analysis. Technical analysis is generally based on the study of trading volumes and price movements in
an attempt to identify and project price trends. Technical analysis does not consider the fundamentals of the underlying issuer or instrument and may offer an
investment opinion that conflicts with other research generated by Hypo Alpe-Adria-Bank. Investors may consider technical research as one input in
formulating an investment opinion. Additional inputs should include, but are not limited to, a review of the fundamentals of the underlying
issuer/security/instrument.
Distribution of recommendations
Number of recommendations from Hypo Alpe-Adria-Bank, Economic Research Department, at 31.03.2013. broken down by categories
1 (16%) Buy / Add
0 (0%) Hold
2 (34%) Sell / Reduce
3 (50%) Under review
0 (0%) Restriction
thereof recommendations for companies to which investment banking services were provided during the preceding twelve months
- Buy / Add
- Hold
- Sell / Reduce
Coverage policy
A list of the companies covered by Hypo Alpe-Adria-Bank is available upon request.
Frequency of reports and updates
Although it has not been determined in advance whether and in what intervals this report will be updated, if the publication is a fundamental research report, it
is our intention that each of these companies are covered at least once a year, in the event of key operations and/or changes in the recommendation, subject
to applicable quiet periods and capacity constraints.
SIGNIFICANT FINANCIAL INTEREST:
Hypo Alpe-Adria-Bank and/or affiliate (pursuant to relevant domestic law) regularly trade shares of the analyzed company(ies).
Hypo Alpe-Adria-Bank and/or affiliate (pursuant to relevant domestic law) acts as a market maker in government bonds issued by the Croatian Ministry of
Finance (Treasury).
ANALYST CERTIFICATION
The research analyst(s) or analysts who prepared this report (see the first page) hereby certifies that: (1) the views expressed in this report accurately reflect
their personal views about the subject securities or issuers and/or other subject matter as appropriate; and, (2) no part of his or her compensation was, is, or
will be directly or indirectly related to the inclusion of specific recommendations or views in this report. On a general basis, the efficacy of recommendations
and clients' feedback are factors in the performance appraisals of analysts.
ORGANIZATIONAL AND ADMINISTRATIVE ARRANGEMENTS TO AVOID AND PREVENT CONFLICTS OF INTEREST
To prevent or remedy conflicts of interest arising as a result of the preparation and publication of research, Hypo Alpe-Adria-Bank has established the
organizational arrangements required from a legal and supervisory aspect, adherence to which is monitored by Hypo Alpe-Adria-Bank Legal Affairs and
Compliance Department. Conflicts of interest arising as a result of the preparation and publication of research are managed through its use of internal
databases, notifications by the relevant employees as well as legal and physical and non-physical barriers (collectively referred to as 'Chinese Walls')
designed to restrict the flow of information between one area/department of Hypo Alpe-Adria-Bank and another. In particular, Investment Banking units,
including corporate finance, capital market activities, financial advisory and other capital raising activities, are segregated by physical and non-physical
boundaries from Markets Units, as well as the research department. For further details see our Policy for managing conflicts of interest in connection with
investment research at http://www.hypo-alpe-adria.hr/bank/dokumenti/Politika_sukob_interesa.pdf
Hypo Alpe-Adria-Bank d.d. is regulated by the Croatian Financial Services Supervisory Agency (HANFA) for the conduct of designated investment business in
Croatia.
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Hypo Economic Research Contacts
Name
Coverage
Telephone
Email
Hrvoje Stojic
Economic Research Director
economics, money market,
strategy
+385-1-603-0509
[email protected]
Boris Mazurin
capital markets, banks
Team Leader Capital Market Research
+385-1-603-1848
[email protected]
Andrej Knez
Senior Analyst
economics, money market,
strategy
+385-1-603-2143
[email protected]
Ana Vitaic Gladovic
Analyst
capital markets, banks
+385-1-603-3267
[email protected]
Ivana Kovacic
Junior Analyst
economics, money market
+385-1-603-3405
[email protected]
Hypo Alpe-Adria-Bank d.d.
Slavonska avenija 6, 10000 Zagreb
[email protected]
phone: +385-1-603-2143
fax: +385-1-606-7143