SLSP shares affected by low transparency

Shares of Slovenská Poisťovňa (SLSP), the largest Slovak insurer, will continue to stagnate until the company's financial management becomes more transparent, market analysts and brokers maintain. SLSP is one of the most heavily capitalized Slovak shares but its liquidity is extremely low.
The issue last traded on February 11 when it closed at a year low of 1,000 Sk. "There just are not a lot of trades [of the issue] on the market," said Michal Holík of J&T Securities. "From our point of view [its] liquidity is very low."
One reason for the low liquidity is that the company's management holds a large portion of the issue's free float while over 50 percent is held by the state privatization agency, the National Property Fund (FNM). The SLSP has not yet been slated for further privatization.

Shares of Slovenská Poisťovňa (SLSP), the largest Slovak insurer, will continue to stagnate until the company's financial management becomes more transparent, market analysts and brokers maintain. SLSP is one of the most heavily capitalized Slovak shares but its liquidity is extremely low.

The issue last traded on February 11 when it closed at a year low of 1,000 Sk. "There just are not a lot of trades [of the issue] on the market," said Michal Holík of J&T Securities. "From our point of view [its] liquidity is very low."

One reason for the low liquidity is that the company's management holds a large portion of the issue's free float while over 50 percent is held by the state privatization agency, the National Property Fund (FNM). The SLSP has not yet been slated for further privatization.

However, an even bigger problem according to analysts was the sheer opaqueness of the company's financial management. "First of all, it is the largest insurance company in Slovakia but it is not audited by any of the big six [accountancy firms]," said Vladimír Zlacký, equity analyst with ING Barings. "The market doesn't really see what is going on in the company."

Dušan Sýkora, analyst with Creditanstalt, said trading with the share was also hampered by restrictions on foreign ownership in Slovak insurance companies. "Basically, they are the biggest and best insurance company but there is a clause in the Securities Act that foreign investors can't buy more than five percent of insurance companies," he said.

The SLSP controlls around 70 percent share on the domestic insurance market and it is one of the most profitable companies on the bourse.

Zlacký said SLSP's 1997 net profits would probably fall to around 300 million crowns from 359 the year before, but that the company remained healthy. With the share price standing at 1,000 crowns, the price-earnings ratio is about 5.0.

Dealers and analysts said they didn't expect substantial movements in the insurer's share price in the coming months, adding that the outcome of parliamentary elections in September could be crucial to SLSP.

Get daily Slovak news directly to your inbox

Top stories

News digest: Foreigners’ Police departments remain closed

Slovenia has ordered PCR tests developed by Slovak scientists. Holocaust survivors received the coronavirus vaccine jab.

7 h

Slovakia has more and more vaccines available. State lacks courage

Slovakia is taking a cautious approach to make sure it will be able to deliver second doses when needed.

11 h
Police control at the border crossing in Drietomá (Trenčín Region).

Stricter curfew rules come into force, police intensify checks

Negative test result required when going to work or doing sports in nature.

13 h
The entry of new data is required via Slovensko.sk.

Companies complain about an absurd fee. They need to add information state also has

Firms have to add their representatives’ birth numbers to business register. They can be fined if they fail to do it.

13 h