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Equity Weekly

Equity Research - Monday, September 7, 2009

Index value Weekly Change,% Weekly Turnover

Baltic Indices
360 Estonia 407.4 2.56% €19,7m

335 Market remained active last week in Estonia. Higher than usual volume was seen
in Tallink, Olympic, Nordecon and Estonian Telecom. Nordecon
310 International Group main shareholder AS Nordic Contractors informed that it
sold 2 300 000 shares of Nordecon International AS to institutional investors. In
Tallink very big blocks were crossed at €0.35 level. In spite of strong selling
pressure in Olympic, demand remains very strong due to strong and positive
Latvia 318.9 3.30% €0,5m
4-Jun 18-Jun 2-Jul 16-Jul 30-Jul 13-Aug 27-Aug
Trading in Riga remained rather optimistic. Most of turnover was formed by both
Baltic Benchmark OMX Tallinn*
OMX Riga* OMX Vilnius* pharmaceutical manufacturers Grindeks and Olainfarm where stable buying
* Relativ e to Baltic Benchmark Source: Reuters, Swedbank interest led both companies share prices significantly higher. The biggest gainer
was Latvijas Balzams where retail pushed stock price by more than 30% higher
to new year high level LVL 2.24 however volumes remained rather low.
Last Weekly Weekly P/E P/BV
Estonia (in €) Close Change Volume Trail. 4Q 09F Last Q 09F
Arco Vara 0.24  9.1% 2379087 -0.3 -3.0 0.5 0.6
Lithuania 283.3 -0.72% €7,9m
Baltika 0.75  5.6% 448725 -1.8 -2.7 1.1 1.0
Eesti Telekom 6.05  2.2% 550734 10.3 12.8 4.1 3.4
Ekspress Grupp 1.30  4.0% 67704 7.8 5.8 0.6 0.5 Trading remained active and positive in Lithuania as well. Most actively traded
Harju Elekter 2.20  -2.2% 24049 27.3 28.0 1.4 1.4
shares were again TEO and banks Ukio, Snoras and Siualiu. In Banks mainly
Järvevana 0.32  3.2% 45165
locals remain active on buy side. Foreign investors indicate interest in Snaige,
Merko Ehitus 5.05 0.0% 17852 17.6 -39.3 0.7 0.7
Nordecon International 1.38  7.0% 2533204 16.5 -26.1 0.9 0.9
Invalda, Lietuvos Dujos and City Service.
Norma 3.65  13.0% 131875 12.2 -35.9 0.8 0.8
Olympic Entertainment Group0.64  4.9% 7844443 -3.3 -30.3 0.8 0.7
Silvano Fashion Group
 -6.7%
0.4 Estonia
Tallinna Kaubamaja 4.68  5.2% 220962 -81.8 495.0 1.7 1.6
Tallinna Vesi 9.75  1.6% 46127 10.4 10.5 2.6 2.3
Viisnurk 0.66  1.5% 33161 196.9 4.1 0.7 0.6 Last week Arco Vara posted Q2 2009 figures. Due to revaluations in Q2,
Last Weekly Weekly P/E P/BV the results were weaker than expected. Revenues dropped by 56% Y-o-Y to
Latvia (in LVL) Close Change Volume Trail. 4Q 09F Last Q 09F
€5.7m in Q2 and -41% Y-o-Y to €11.8m in H1 2009. During H1, 25
Grindeks 4.35  6.9% 40565 4.6 6.3 0.9 0.8
Latvian Gas 4.69  0.6% 784 9.2 0.6
apartments or land plots were sold and 21 were booked. In the six month
Latvian Shipping Company 0.65  1.6% 15869 2.5 1.9 0.3 0.2 period, 16 apartments were sold in the “Kodukolde” project in Tallinn and 7
Latvijas Balzams 2.24  30.2% 5299 7.5 0.5 apartments in “BM-1” in Latvia. In the Boulevard Residence Madrid project
Liepajas Metalurgs 1.10  7.8% 2524 1.0 0.2
Olainfarm 0.75  8.7% 140338 -9.3 30.1 0.7 0.6
in Sofia, a 30-year rental agreement was concluded with the Austrian
SAF Tehnika 0.63  1.6% 40767 -2.1 1.0 0.2 0.2 supermarket chain Billa, by which the supermarket will rent approx. 900 m²
Valmiera Fibre Glass 0.40  -2.4% 17985 0.7 0.3 of the building’s ground floor sales space. Q2 net profit came in at €-1.6m
Ventspils Nafta 1.10  1.9% 7322 3.2 0.4
because Q2 2009 interest expenses were slightly more than twice those in
Lithuania (in LT L)
Weekly Weekly
Change Volume Trail. 4Q 09F Last Q 09F
Q2 2008, but the deeper loss in the bottom line was saved by the value of
Apranga 2.99  -3.5% 218084 23.1 -4.5 1.2 1.1 financial assets which was adjusted by €2m.
City Service 7.35  9.5% 128073 12.8 8.7 2.2 1.8
Grigiskes 0.76  -3.8% 446704 -10.0 0.7 Tallink statistics for its key final quarter are out. Number of passengers
Invalda 2.17  1.4% 377470 -0.8 0.6 shipped in 4Q FY08/09 increased to 2.7m (+14.3% YoY) while number of
Klaipedos Nafta 1.05  -3.7% 323006 13.3 0.8
cargo units dropped to 58.6 thousand (-21.9% YoY). In august passenger
Lietuvos Dujos 2.14  -0.5% 284313 25.2 16.0 0.5 0.5
Lietuvos Energija 2.90 0.0% 78548 -55.4 0.8
volume increased to 0.85m (+8.8% YoY), monthly cargo volume dropped to
Lietuvos Juru Laivininkyste 0.44  -2.2% 145295 -2.2 0.4 19.4 thousand (-20.5% YoY). In both business segments, Tallinn-Helsinki
Lifosa 32.10  -4.1% 18053 4.2 0.8 route has had the most significant impact as 54% of the 339 thousand
 8.0%
Panevezio Statybos Trestas 3.63
Pieno Zvaigzdes 3.05  18.7%
19.6 5.5
1.1 1.0
passengers transported more were from this route as well as 33% of 16.5
Rokishkio Suris 3.02  13.5% 54758 -13.4 0.7 thousand cargo units transported less. August results didn’t have material
RST 2.69  -10.3% 280124 -15.2 0.5 effect on our valuation, we reiterate “HOLD” recommendation with €0.38 per
Sanitas 9.95  1.0% 61078 -12.2 1.3 share target price.
Siauliu Bankas 1.08  1.9% 993466 4.4 0.7
Snaige 0.66  4.8% 1745984 -0.6 0.4 Baltika posted sales for August, with overall sales down by 36%, retail sales
Snoras 1.01  13.5% 3437347 1.4 0.4
TEO LT 1.84 0.0% 3013819 9.0 9.7 1.3 1.4
down 29% and wholesale down 58%. After declines in retail have
Ukio Bankas 1.03  3.0% 6643715 1.2 0.4 moderated during previous few months, August seemed a bit poorer than
Source: Reuters, Swedbank

Attention: Please note important background and customer information at the end of this report

Equity Research – Swedbank Markets Page 1 of 5

Equity Weekly – 7 September 2009

usual. Baltika has taken a decision to liquidate its Czech subsidiary in August 2008 as well.
Ekspress Grupp made an announcement of changes in the management board. The
Chairman of the Management Board of the Ekspress Group of almost four years, Priit Leito,
is to leave his post to take over the running of Modern Times Group´s subsidiaries in
Estonia AS TV3 and Mediainvest Holding AS. One of the former founders of the media
group, Gunnar Kobin, is to return to manage the Ekspress Group.
Olympic Entertainment Group announced that its current CEO, Andri Avila, will step
down and his place will be taken by Indrek Jürgenson. Mr. Jürgenson has IT and telecom
background and his knowledge in the area will come in handy as OEG is branching into the
online gaming market starting Jan 2010. Entering online gaming market is likely to create
upside, as one of the main key drivers for success in online gaming is the brand, and OEG
is well known especially in its home markets. Mr. Avila will continue working on the
supervisory board of OEG. The company has taken a number of initiatives aimed at
improving the group’s bottom line – but we believe that full results should be seen only
towards the end of first half of next year.

No Corporate News.

Rokiskio Suris continuous to buy back own shares. The shareholders meeting held on
31.08.2009 canceled 4’271’636 treasury shares and adopted the decision to buy back
another 10% of own shares. After the cancelation the company’s authorized capital
consists of 38’444’894 shares. The shareholders meeting decided to form a reserve of LTL
10m for the share buyback program for the next 18 months.
In August Apranga reached the turnover (sales + VAT) of LTL 39.2m, down by 23.6% yoy.
Klaipedos nafta transshipped 539’700 tons of oil products in August and from the
beginning of the year 4’918’300 tons. In August the company reported LTL 7.5m in sales
and LTL 74.7m from the beginning of the year.

Attention: Please note important background and customer information at the end of this report

Equity Research – Swedbank Markets Page 2 of 5

Equity Weekly – 7 September 2009

Investor Calendar:
Date Description
No Corporate News

No Corporate News

7.09.2009 RSU1L - Preliminary turnover of the Group for August and 8M 2009
8.09.2009 LEN1L - Annual General Meeting
8.09.2009 VST1L - Annual General Meeting
10.09.2009 VLP1L - Consolidated sales revenue in August 2009
11.09.2009 PTR1L - Annual General Meeting


Attention: Please note important background and customer information at the end of this report

Equity Research – Swedbank Markets Page 3 of 5

Equity Weekly – 7 September 2009

Swedbank Markets Baltic Equity research & Institutional sales:

Energy, Materials & Utilities Industrials Equity Sales
Pavel Lupandin Estonia Risto Hunt Estonia Kristiina Vassilkova Baltic Institutional Sales +372 6 131 535 +372 6 136 796 +372 6 131 663
Donatas Užkurėlis Lithuania Marko Daljajev Estonia Andres Suimets Head of Sales (Estonia) +370 5 268 4395 +372 6 131 246 +372 6 131 657
Svetlana Skutelska Head of Sales (Latvia)
Telecom Services Financials +371 6744 4154
Marko Daljajev Estonia Risto Hunt Estonia Simona Sileviciute Head of Sales (Lithuania) +372 6 131 246 +372 6 136 796 +370 5268 4513
Neringa Džiugelytė Lithuania Marko Daljajev Estonia +370 5 268 4733 +372 6 131 246 Equity Trading
Simmo Sommer Head of Baltic Trading
Consumers Healthcare +372 6131 605
Pavel Lupandin Estonia Marko Daljajev Latvia +372 6 131 535 +372 6 131 246 Equity Capital Markets
Neringa Džiugelytė Lithuania Lauri Lind Head of Baltic Equity Capital Markets +370 5 268 4733 +372 6 131 355
Donatas Užkurėlis Lithuania Mihkel Torim Baltic Equity Capital Markets +370 5 268 4395 +372 6 131 564

Swedbank Group Homepage: For Research products on Bloomberg please type: HBMR <GO>.

Background Information:
Recommendation structure
Swedbank Markets’ recommendation structure consists of six recommendations: Buy, Accumulate, Hold, Reduce, Sell and Avoid. The
recommendations are based on an absolute return for the security 12 months forward. The absolute return includes share price appreciation
and dividend yield combined.
The recommendations for the securities mentioned in this report are based on risk and return considerations. The higher the risk category of
the investment, the higher the required return. For equity investments, returns are defined as capital appreciation and dividends received over
the investment horizon of 12 months forward. The expected capital appreciation is the ratio of a stock’s target price over the current price. A
company risk rating depends on its stock price volatility, liquidity and business outlook. The target price depends on a company’s
fundamentals as well as the market valuation of peer stocks, and can be changed at any time if the relevant changes occur within a
company/market perception of the peer group. “Buy”, “accumulate”, “hold”, “reduce”, “sell” and “avoid” recommendations may be used in this
report. The table below presents the relationship between recommendations and target prices compared to risk level of the stock. These are
indicative ranges and actual recommendations may deviate from the indications if other relevant issues are considered. For more detailed
information about the recommendation system please visit

Recommendation structure

Buy > +20% to target price

Accumulate +10% < target price < +20%
Hold 0% < target price < +10%
Reduce -10% < target price < 0%
Sell < -10% to target price
Avoid used when security does not match the standards presented in SWB’s investment guidelines

The recommendation by Swedbank Markets Equity Research department is based on a variety of standard valuation models. However, the
base for the calculation of the target price is our DCF model (DCF = discounted cash flow) with the exception of financial and investment
companies. The DCF model discounts future cash flow at present value.
In preparation of this report different valuation methods have been used, including, but not limited to, discounted free cash-flow and
comparative analysis. The selection of methods depends on the industry, the company, the nature of the stock and other circumstances.
The target price (previous fair value) takes into account the DCF value, the relative valuation of the share versus others peers (national or
international) and news that can have a positive or negative effect on the share price. Relative and absolute multiples that we consider are:
EV/EBITDA, EV/EBIT, PE, PEG and Net Asset models for companies with liquid markets for their assets and other industry specific ratios
when available. Break-up valuation models are also sometimes considered.

Recommendations by the 07 sept 2009 23%

No of shares Part of Total Hold

Buy 5 23% Under
Hold 1 5% Rev iew >
Reduce 2 9% 54% Reduce
Sell 2 9% 9%
Under Review 12 55% 9%

Equity Research – Swedbank Markets Page 4 of 5

Equity Weekly – 7 September 2009

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