Stocks down but blue chips in black for 2000

Slovak stocks ended March 2001 trading at lower levels, generally unmoved on the basic financial results of flagship companies. The SAX opened the month at 89.35 but in the course of March dropped 8% to 81.89 points.
The most traded stock on the BSE floor and OTC (Over-the-Counter) market, Slovnaft, announced unaudited financial results for the previous year showing an improved performance on 1999. Slovnaft recorded a profit of 2.57 billion crowns ($51 million), improving on a loss of 2.48 billion crowns in 1999. Despite the positive result the market was less than bullish on the issue; during the month its price fell from 470 crowns to 425 crowns at the end of the first quarter. Since the FNM privatisation agency announced its intention to sell or exchange its 4.5% stake in Slovnaft for FNM bonds, its price has dropped 17%.


Ivan Matušek

Slovak stocks ended March 2001 trading at lower levels, generally unmoved on the basic financial results of flagship companies. The SAX opened the month at 89.35 but in the course of March dropped 8% to 81.89 points.

The most traded stock on the BSE floor and OTC (Over-the-Counter) market, Slovnaft, announced unaudited financial results for the previous year showing an improved performance on 1999. Slovnaft recorded a profit of 2.57 billion crowns ($51 million), improving on a loss of 2.48 billion crowns in 1999. Despite the positive result the market was less than bullish on the issue; during the month its price fell from 470 crowns to 425 crowns at the end of the first quarter. Since the FNM privatisation agency announced its intention to sell or exchange its 4.5% stake in Slovnaft for FNM bonds, its price has dropped 17%.

Steel manufacturer VSŽ saw its shares move in generally poor trading in a narrow range between 130 and 140 crowns, and closed March actually below this at 125 crowns. The OTC quotation was slightly higher at 134 crowns and left the month's average at 130 crowns.

The engineering industry, represented by Stredoslovenské energetické strojárne (SES) reported contracts worth 3.9 billion crowns for 2001 and 2000 profits of 90 million crowns. SES ranks among those Slovak companies with strong growth potential in the medium-term, and almost 80% of this year's total production is destined for foreign companies. Good financial prospects and lucrative long-term contracts on world markets have given the firm a bright outlook. Throughout March its market price was stable at between 150 and 160 crowns, closing the period on the BSE at 160 crowns while the OTC price was 158 crowns.

Similar to the other blue chips on the market, pharmaceutical producer Slovakofarma had a closing bid lower than its March starting level. Slovakofarma lost 6% over the period, closing the month in OTC trading at 1,150 crowns and 1,100 crowns on the BSE. The firm closed 2000 in black numbers with a profit of 350 million crowns, up 3% year-on-year, but also announced 212 jobs at the firm would be cut.

Investments of 190 million crowns, though, have been made into improvement of its drug production portfolio and strengthening its market position. Taking these into consideration, Slovakofarma stocks are traded at a lower level than they should be, and represent a very good long-term investment opportunity.

Gas storage firm Nafta Gbely saw poor trading in March and was sold at 640 crowns at the end of the month after opening March at 935 crowns. The price has fallen since the German firm Westfalische Ferngas AG took over 40% of Nafta, because of the very small free float left on the market - approximately 3%. Nafta closed last year with a non-consolidated loss of 140.6 million crowns.

State bank Všeobecná úverová banka, now looking for a strategic investor, reported a profit of 5.9 billion crowns in 2000. VÚB has attracted two foreign banks - Italian Banca Commerciale Italiana and French Societe Generale. Recently, the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) bought a combined 25% of VÚB. Since the privatisation process in the banking sector was started in summer last year, VÚB's shares have been actively traded and have grown 147% year-on-year.

However, VÚB's March trading was bearish and its share price oscillated between 780 and 750 crowns at the month's end.

Ivan Matušek works in the Sales and Trading Department of Slávia Capital brokerage house. Questions and comments can be sent to imatusek@slavia.sk

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