Equity Weekly

Equity Research - Monday, January 11, 2009

Index value Weekly Change,% Weekly Turnover

Baltic Indices
355 Estonia 422 4.32% €2,6m

First week of the year was calm. As usual the most traded shares were Tallink,
335 Olympic and Tallinna Kaubamaja. In Tallink we still see selling pressure from
institutions, Olympic has performed quite nicely and demand is decent. Few
blocks were crossed in Tallinna Kaubamaja.
315

Latvia 315.7 13.17% €97,5k

295

The New Year started with impressive double digit gains for most of shares which
275 led OMX Riga index by 13.17 % higher. There wasn’t any significant news and
8-Oct 22-Oct 5-Nov 19-Nov 3-Dec 17-Dec 31-Dec mostly retail market participants were seen in the market as traded volumes
Baltic Benchmark OMX Tallinn* remained very small.
OMX Riga* OMX Vilnius*
* Relativ e to Baltic Benchmark Source: Reuters, Swedbank

Lithuania 266.2 1.67% €2m

Last Weekly Weekly P/E P/BV
Estonia (in €) Close Change Volume Trail. 4Q 09F Last Q 09F
Arco Vara 0.19  11.8% 575096 -0.2 9.0 0.6 0.4 Most actively traded shares on Vilnius Stock Exchange were TEO, gaining 5% to
Baltika 0.68  -6.8% 65516 -1.6 -1.8 1.0 1.1 1.91 LTL level, and banks. Institutional demand was recorded in City Service,
Eesti Telekom 5.90  -0.7% 2647 10.1 16.6 4.0 4.8 Klaipedos Nafta and Lifosa.
Ekspress Grupp 1.01  -1.9% 26155 -4.4 -4.3 0.6 0.6
Harju Elekter 2.24  8.2% 37198 35.4 28.5 1.3 1.5
Järvevana 0.37  5.7% 9600
Merko Ehitus 5.44  8.4% 17185 21.0 -77.9 0.7 0.8
Nordecon International 1.70  7.6% 45033 91.4 -32.1 1.0 1.2
Norma 4.10
Olympic Entertainment Group 0.76
 5.1%
 -1.3%
7845
1429071
39.9
-2.3
-40.3
-3.8
0.9
1.4
0.9
1.5
Estonia
Silvano Fashion Group 0.86  10.3% 67357 -29.4 -22.7 1.1 0.9
Tallink
Tallinna Kaubamaja
0.38
3.86
 2.7%
 6.9%
1587536
81899
-31.3
-26.9
7.5
-16.3
0.4
1.4
0.4
1.5
AS Ekspress Grupp made an announcement of increasing share capital
Tallinna Vesi 10.40  4.0% 4091 10.6 10.1 2.6 2.4 with 8 896 800 new shares with the nominal value of EEK 10 per share. As
Viisnurk 0.81  12.5% 12760 241.6 5.1 0.8 0.7 a result the new size of the share capital is EEK 297,456,410 or approx.
Last Weekly Weekly P/E P/BV
€19m. Upon the increase of share capital, the right to subscribe about
Latvia (in LVL) Close Change Volume Trail. 4Q 09F Last Q 09F
Grindeks 3.90  2.6% 716 3.5 5.6 0.5 0.7
6,250,000 new shares to be given to existing shareholders of AS Ekspress
Latvian Gas 5.00  22.0% 839 9.8 0.7 Grupp and to any other interested party. The subscription rights with respect
Latvian Shipping Company 0.47  17.5% 43007 1.8 1.3 0.2 0.2 of existing shareholders, the shareholders shall have pre-emptive right to
Latvijas Balzams 1.83  -3.7% 37 6.2 0.4
Liepajas Metalurgs 1.40  25.0% 3775 1.3 0.3
subscribe new shares in case they are fixed in the list of shareholders as at
Olainfarm 1.04  10.6% 8421 105.7 9.7 0.9 0.9 27.01.2010 at 23.59. About 2,646,800 new shares shall be offered directly
SAF Tehnika 0.54  12.5% 24797 -1.8 0.8 0.2 0.1 to ING Luxembourg S.A. and HHL Rühm OÜ.
Valmiera Fibre Glass 0.48  11.6% 1147 0.9 0.4
Ventspils Nafta 0.98  4.3% 1981 2.8 0.3 On Jan 5th Baltika reported its Q4 and 2009 sales. Total sales for Q4
Last Weekly Weekly P/E P/BV
amounted to €4.4m, 26% decrease yoy. Main driver was the Baltic market
Lithuania (in LT L) Close Change Volume Trail. 4Q 09F Last Q 09F
Apranga 2.94  6.9% 118098 22.7 -4.4 1.2 1.1
with CEE posting highest % declines as company left Czech Republic
City Service 6.26  -3.1% 92662 10.9 7.4 1.9 1.5 market in October. Sales in Russia and Ukraine were down 15% yoy. Sales
Grigiskes 0.95  2.2% 104486 -12.5 0.9 for the full year were €56.4m (-26% yoy). Number of stores for the end of
Invalda
Klaipedos Nafta
2.12
0.96
 15.2%
 2.1%
142816
200893
-0.8
12.2
0.6
0.8
the year was 133 over 26900 m². The company opened 23 stores and
Lietuvos Dujos 2.05  -2.4% 30833 24.1 15.3 0.5 0.5 closed 24. Overall this has been a very difficult year for the company but
Lietuvos Energija 2.35  -0.4% 16709 -44.9 0.6 2010 is going to be a very tough test as well as company now needs to
Lietuvos Juru Laivininkyste 0.45  4.7% 12035 -2.2 0.4 return to profitability and we see this as rather difficult task as consumer
31.70  14.1%
Lifosa
Panevezio Statybos Trestas 3.92  3.4%
24993
61570
4.2
2.2
0.8
0.6
demand in Baltics remains very weak. However it is likely that we have
Pieno Zvaigzdes 2.97  1.0% 3207 19.1 5.4 1.1 1.0 reached a bottom in terms of retail sales and further declines are not likely
Rokishkio Suris 3.10  3.3% 3498 -13.7 0.8 to be big (Q1 10 will still be difficult). We keep a Hold recommendation on
RST 1.93  5.5% 270964 -10.9 0.4
the share as we see little upside at this point.
Sanitas 9.80  2.8% 5798 -12.0 1.2
Siauliu Bankas 1.09  -2.7% 137117 4.4 0.7
Snaige 0.59  3.5% 275920 -0.5 0.3
Snoras 0.95  -5.0% 818514 1.3 0.4
TEO LT 1.91  4.4% 566558 9.0 8.9 1.5 1.4
Ukio Bankas 1.03  -2.8% 1185634 1.2 0.4
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 – 11 January 2009

Latvia
No Corporate News.

Lithuania
Apranga continues to struggle for the retail turnover (sales including VAT). In December
the retail turnover comprised LTL 35.2m (EUR 10.2m), down 21.4% yoy. The retail turnover
for the whole year was LTL 392.6m (EUR 113.7m) or 22.9% less than in 2008.
In December 2009 Rokiskio suris delivered LTL 43.6m (EUR 12.6m) in sales or 17.5%
less than for the same period a year ago. Throughout 2009 the company’s sales were LTL
561.2m (EUR 162.5m), down 17.7% yoy. The 2009 sales lagged from the estimated by 3.8
%, mainly due to the temporary export ban to Russia, and the decreased sales on the
internal market due to the drop in demand.
Invalda plans to issue a non-public LTL 25m convertible bonds issue. Total convertible
bonds issue size is 250 000 units, the nominal value of one convertible bond is LTL 100
with an annual interest of 9.9% (considering there are 365 days per year). The bond of
nominal value LTL 100 can be converted to ordinary registered shares at ratio 5.5 (one
bond would be converted into 18.18 shares approximately, final result is to be rounded by
arithmetical rules). The investor, who acquired the whole bonds issue and chooses to
convert to shares all owned bonds, can exercise this right at any time until April 2, 2012, by
delivering written application to Invalda AB.
The company plans another non-public LTL 7.44m convertible bonds issue under the same
terms but cancelling the pre-emptive right of existing shareholders to acquire the bonds.
The right to acquire all convertible bonds of this issue is granted to DIM Investment UAB,
code 301145749, registered address Konstitucijos ave. 23, Vilnius, Lithuania. The reason
for withdrawal of the pre-emptive right is to secure funds to rearrange the liabilities of
Invalda AB.
Vilkysiu pienine managed to increase December sales by 14.2% yoy to LTL 14.03m (EUR
4.06m). Throughout the year the company’s sales amounted to LTL 159.5m (EUR 46.2m),
up by 4.9% yoy.
Pursuing the resolution of the 31st August 2009 general meeting of shareholders of
Rokiskio suris - to acquire up to 3.844.480 units of ordinary registered shares (10% of the
authorized capital). The price for purchase of own shares is set at LTL 2.50 per ordinary
share. The duration of the offer is set at 14 days. The shares will be purchased as from
13th January 2010 until 26th January 2010, via the official tender submarket of Securities
Exchange NASDAQ OMX Vilnius. In case the quantity of shares offered for purchase is
greater than it is intended to buy, the amount of offered for purchase shares will be
proportionally decreased.

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

Equity Research – Swedbank Markets Page 2 of 5

 Equity Weekly – 11 January 2009

Investor Calendar:
Date Description
Estonia
No Corporate News

Latvia
No Corporate News

Lithuania
No Corporate News

Source: NASDAQ OMX

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

Equity Research – Swedbank Markets Page 3 of 5

 Equity Weekly – 11 January 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
pavel.lupandin@swedbank.ee +372 6 131 535 risto.hunt@swedbank.ee +372 6 136 796 kristiina.vassilkova@swedbank.ee +372 6 131 663
Donatas Užkurėlis Lithuania Marko Daljajev Estonia Andres Suimets Head of Sales (Estonia)
donatas.uzkurelis@swedbank.lt +370 5 268 4395 marko.daljajev@swedbank.ee +372 6 131 246 andres.suimets@swedbank.ee +372 6 131 657
Svetlana Skutelska Head of Sales (Latvia)
Telecom Services Financials Svetlana.skutelska@swedbank.lv +371 6744 4154
Marko Daljajev Estonia Risto Hunt Estonia Simona Sileviciute Head of Sales (Lithuania)
marko.daljajev@swedbank.ee +372 6 131 246 risto.hunt@swedbank.ee +372 6 136 796 simona.sileviciute@swedbank.lt +370 5268 4513
Marko Daljajev Estonia
marko.daljajev@swedbank.ee +372 6 131 246 Equity Trading
Simmo Sommer Head of Baltic Trading
Consumers Healthcare simmo.sommer@swedbank.ee +372 6131 605
Pavel Lupandin Estonia Marko Daljajev Latvia
pavel.lupandin@swedbank.ee +372 6 131 535 marko.daljajev@swedbank.ee +372 6 131 246 Equity Capital Markets
Donatas Užkurėlis Lithuania Mihkel Torim Baltic Equity Capital Markets
donatas.uzkurelis@swedbank.lt +370 5 268 4395 mihkel.torim@swedbank.ee +372 6 131 564

Swedbank Group Homepage: www.swedbank.com. For Research products on Bloomberg please type: HBME <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 http://www.swedbank.ee/disclaimers/recommendation2007.pdf

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 11 jaan 2010

No of shares Part of total
Buy 9 ██████████ 41%
Accumulate 2 ██ 9%
Hold 3 ███ 14%
Reduce 1 █ 5%
Sell 1 █ 5%
Under Review 6 ██████ 27%

Equity Research – Swedbank Markets Page 4 of 5

 Equity Weekly – 11 January 2009

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