LUKA KOPER D.D.

Transcription

1 27 th August 212 LUKA KOPER D.D. Port & Logistics LJSE ticker: LKPG Bloomberg: LKPG SV Target price: 13. EUR Previous target price: 13.7 EUR, BUY ( ) Recommendation: BUY 12 months stock performance in EUR Aug 11 Nov 11 Feb 12 May 12 Aug 12 LKPG SBI TOP Stock data as of 27 th August 212 Market price (EUR) 6.6 Market Cap (EUR) 92m 52 week range (EUR) No. of Shares 14.m Avg. daily trade vol., EUR(k) Free float 3% Average daily % of stock traded.1% Dividend yield % Price performance Multiples: TTM 212F 3 months 12 months P/E price change in % -34.8% -38.5% EV/Sales 1,5 1.5 SBI TOP index change in % -1.5% -22.6% EV/EBITDA relative to SBI TOP in % -27.1% -2.5% EV/EBIT Key figures (According to International Accounting Standards) Consolidated data in EURm Income statement: Balance sheet: million FY21 FY211 FY212 FY213 million FY21 FY211 TTM Sales Investments Growth yoy 1.% 12.7% 1.8% 6.1% Cash EBITDA Debt Margin 32.3% 35.2% 33.7% 33.4% Net debt EBIT Equity Margin 11.3% 15.9% 14.9% 15.8% Assets Net income Fin. D/E 92.1% 85.5% 8.6% Growth -95.7% % % 6.7% Fin. D/A 44.9% 43.% 41.4% EPS N.Debt/EBITDA Investment Thesis: Strategic location. Gaining market share. Movement to more value added cargo. Connection to the regional GDP growth. New CAPEX cycle coming. ALTA Invest, investicijske storitve, d.d. Železna cesta 18 SI-1 Ljubljana Slovenia phone: invest@alta.si Head of Research: Sašo Stanovnik saso.stanovnik@alta.si Head of Trading: Igor Taljat igor.taljat@alta.si Strategic location of port: The geographic location of Luka Koper (at the far end of the Adriatic Sea) is a crucial strategic advantage of the company. Not only are they the closest port for the domestic, Austrian and Hungarian markets, their position gives them an additional competitive advantage for Asian exporters since they can deliver cargo through the Adriatic sea to Central and SE Europe instead of sailing around Europe through the Mediterranean and Atlantic to ports in the Netherlands or Germany. Cost effectiveness of maritime transport provided assurance of growth: In the time of globalisation companies are turning their attention to cost efficient transport. The most cost efficient by far is sea transport, followed by river transport, railways and, finally, lorry transport. Ratios of cost efficiency for these four types of transport are around 1 : 1 : 17.5 : 25. Due to this fact the trend of increasing maritime throughput was present during the last decade. Luka Koper has benefited enormously since maritime throughput rose from 9.3 million tonnes in 2 to over Total maritime throughput (in tonnes) million in Although the slump in economic activity has interfered with growth trends from 2, Luka Koper Group has again in achieved a record maritime throughput of over 17. million tonnes Overall this means 4. average yearly growth of 5.6% from 2 to In 1H12 throughput growth continued. Thousands 1 / 9

2 Gaining market share: The main three factors for throughput growth for Luka Koper are: GDP dynamic (growth), globalisation pushing for cost effectiveness (explained above) and market share dynamic. The later shows Luka Koper is highly competitive, partly associated by the fact the port is not organized into Port Authority and operators, but has a long term contract with state ensuring rights and obligations. The other important reason for this positive market share dynamic is strategic location of Luka Koper. Luka Koper s data regarding market share clearly states, that they are gaining throughput market share in North Adriatic sea: Throughput in mio tonnes Trieste Venezia Ravenna Rijeka Luka Koper Luka Koper's market share 11.5% 12.1% 11.6% 12.7% 13.8% Throughput in TEU Trieste Venezia Ravenna Rijeka Luka Koper Luka Koper's market share 24.4% 24.4% 26.3% 32.5% 32.6% Source: Luka Koper The data shows that Luka Koper is especially successful in gaining container throughput, as average yearly growth in 2 till 211 period was 19.%. We believe Luka Koper can continue with market share growth especially in container and car segment as management is and will be focused on these two segments. This also means that the company is able to somewhat compensate for currently unfavourable GDP environment, so top-line growth should remain attractive. The share of value added cargo increasing: Trend of changing marine throughput to a more value-added cargo, especially containers and vehicles, is still ongoing. Average yearly growth for container transport from 2 to 28 was 19.2% and 13.6% for vehicles transport but this changed in 29 due to global recession. But already in 21 the trend continued, as strong recovery was seen in almost all segments. Container freight grew in 21 and 211 by 38.9% and 23.6% respectively. In vehicle segments recorded growth in mentioned years was 2.6% and 18.3%. With this, Luka Koper Group is on record throughput levels for containers (well above 28 levels) and at 8% of record throughput of vehicles. We believe trends toward these two segments will continue and with it the above average growth. Here we also note that the share of these two segments in total revenues increased from 27% in 29 to Thousands Thousands Maritime throughput of Containers (TEU) %, while Luke Koper is planning to achieve yearly throughput of 2 mio TEU s in the next ten years (tripling current throughput). We must note however that 1H12 showed a setback in this respect as container throughput fell by 3.2% YoY. On the other hand vehicle throughput increased by 12.3% YoY. CAPEX will prevent a bottleneck in the future: Extensions to the existing piers and additional storage facilities will support continued high growth over the next decade, while not Maritime throughput of vehicles (in unit) / 9

3 overstreching company s finance. These expansions are again especially concentrated towards value added cargoes. Together with this port capacity expansion is the state s plan to improve railway infrastructure (just modernisation and slight improvements, not second tier) that would achieve 3% more throughput of railway tier. This plan would enable Luka Koper to continue high growth of throughput in the following years. Third pier is also in-line with this logic, but there is a question of financing (compared to extension of existing piers this would be a costly affair) and approval from local community as in previous years people of newly established municipality of Ankaran were not in favour of this project. So this plan would mean more complicated and longer lasting administrative procedures for Luka Koper. Also there is a possibility that third pier plan would include startegic partner for Luka Koper to partly finance the construction. To ensure profitability of this plan, Luka Koper would also have to seek an agreement with state regarding the construction of second railway tier and third pier in order to prevent bottlenecs or too big capacity. So only if the state would begin the construction of second railway tier would the construction of third pier be appropriate action for Luka Koper. Risks: GDP growth in the region: Growth of economies in the region is highly correlated to the performance of Luka Koper. GDP growth in region was solid in 211 but growth expectations are much worse for 212 as economies of Slovenia, Italy and Hungary are expected to contract. Only Austria is expected to grow. All four markets together account for 6% of Group s sales, so for 212 environment will be difficult and negative surprises for top-line numbers are more likely. Also for 213 the Slovenian economy could still fail to provide growth. On the other hand there are better GDP projections in following years as recovery should follow. Also if Luka Koper continues to gain market share, that should ensure turnover growth despite worse GDP dynamic. 25% 2% 15% y = 3,181x +,182 R² =,776 1% 5% % -6% -4% -2% % 2% 4% 6% -5% -1% -15% -2% We note that Luka Koper published some data about European ports (ESPO): Growth in 1Q12 is at 1.7% YoY, slowdown from 4.7% in 1Q11. Container throughput increased by 3.8% YoY in 1Q12 again down from an 8.3% growth a year earlier. For 211 ESPO forecasts a 4.5% to 6.5% growth in maritime throughput, with biggest contributor being China. State ownership: The majority government stake means additional political risk, as well as economic risk to shareholders, since in the past management did not sufficiently strive for cost reduction, which lead to margin stagnation. Political risk was seen through keeping the shares of Intereuropa in times of very attractive valuations or in trying to force a Slovenian Logistic Holding by merging Luka Koper, Intereuropa and Slovenske Železnice (now this plan is no longer valid). So instead of selling Intereuropa for financing own projects, the deterioration of Intereuropas balance sheets led to its share price drop and that in turn led to significant Luka Koper write-offs affecting ports bottom line in last few years. Also, since costs (especially labour costs) were not managed well enough in the past, this negatively compensated growth of margins due to movement to value added cargo. This is therefore an important future risk for shareholders, namely that a good top-line performance will continue to fail in terms of translation to good bottom-line performance. Third pier questions: The logistic bottleneck for Luka Koper is its railway connections, since there is only one track leading from Koper to Ljubljana. First tier modernisation is expected to be finished by 214 while second tier was expected to be finished by 217 but that is unlikely to happen as government doesn t have necessary funds for its construction. This means construction of 3 rd Pier is also under question. This could of course change should a strategic partner be found. 3 / 9

4 1H12 Results and Recent news Throughput still rising while net profit finally at solid levels million 1H11 1H12 YoY 2Q11 1Q12 2Q12 QoQ YoY Sales % % 3.6% EBITDA % % -7.4% Margin 37.9% 34.7% 38.9% 34.7% 34.8% EBIT % % -8.2% Margin 18.7% 15.4% 19.8% 13.1% 17.6% Net income % % Margin 4.9% 8.6% -2.3% 7.2% 9.9% Throughput continues to increase, with weakness seen only in TEU s. Sales growth below throughput growth and below expectations. Margins contracting but less than expected. Throughput in tonnes increased by 8.% in 1H12 and by 8.5% in 2Q12. The throughput growth is based on vehicles growth (+1.6% in 1H; +12.% in 2Q), liquid cargoes (7.5%; 1.4%) and bulk cargoes (18.2%; 17.1%). On the other hand container freight throughput decreased by 1.6% in 1H12 and 5.% in 2Q12. General cargoes also fell when looking at 1H12 data, but increased in 2Q. They moved 135,655 containers, a decrease of 11.2% YoY in 2Q12 Thousands 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 3,7 3,5 4,163 4,72 3,997 3,891 4,89 Total maritime throughput (in tonnes) and 3.2% decrease YoY in 1H12. This is concerning, with management saying this is due to transition to the new Asian line. This low number was last seen in 4Q1. On the other hand vehicles numbers were at (+14.2% YoY in 2Q). Luka Koper group s revenues are at EUR 36.7m in 2Q12 and 72.5 for 1H12. This represents a 3.6% and 3.2% YoY growth compared to the same period last year. Given the higher growth in throughput it seems pricing environment in some cargos deteriorated. Revenues in 2Q12 were above our expectations of EUR 36.2m and revenues for 1H12 were slightly above our forecasts of EUR EUR 72m. EBITDA in 1H12 amounted to EUR 25.2m, 4% less than management guidance and 5.4% less YoY. EBIT decreased by 15.3% YoY in 1H12, but beating our estimate of EUR 1.8m. Namely the rise in costs and margin contraction is concerning, but it was lower than feared. COGS increased by 9.7% YoY, labour costs by 5.9% and depreciation costs by 3.7% YoY. COGS increased due to increased throughput and higher energy costs. Concession costs amounted to EUR 2.3m and were 2% higher than in the same period last year. Labour costs increased due to increase in wages and higher number of employees (+4% YoY to 1,3 employees). 3,712 2,649 3,188 3,594 3,79 3,991 3,27 4,68 4,488 4,321 4,312 4,357 4,198 4,53 2Q7 4Q7 2Q8 4Q8 2Q9 4Q9 2Q1 4Q1 2Q11 4Q11 2Q12 Low CAPEX. Net financial result improved considerably due to lower impairments (EUR.7m in 1H12 versus EUR 6.3m in 1H11). Interest expenses also decreased from EUR 4.2m to EUR 3.3m (lower Euribor), while financial revenues increased by 62% YoY to EUR.7m. Net income amounted to EUR 6.2m in 1H12, better than expected (EUR 5.1m). In 2Q12 net income was at EUR 3.7m, best since 2Q8. Millions H H11 Other D&A Labor COGS Net debt stood at EUR 123.2m, with financial debt at EUR 195.8m. The debt structure remains healthy with only 12% of the debt short term. In 1H12 they lowered debt by EUR 1.1m. Net debt to EBITDA ratio now stands at 2.6. CAPEX was at EUR 8.4m, 25% less than a year ago. 4 / 9

5 Relative valuation: EV/S EV/EBITDA EV/EBIT Company name TTM 212F 213F TTM 212F 213F TTM 212F 213F Piraeus Port 3.2 n.a. n.a. 1.4 n.a. n.a n.a. n.a. Luka Ploce Luka Rijeka 4.8 n.a. n.a n.a. n.a n.a. n.a. Thessaloniki Port 1. n.a. n.a. 3. n.a. n.a. 3.8 n.a. n.a. Hamburger Hafen und Logistik Port of Tauranga n.a. South Port NZ 3.3 n.a. n.a n.a. n.a. 1.3 n.a. n.a. Lyttelton Port 2.7 n.a. n.a. 9.3 n.a. n.a n.a. n.a. EUROKAI KGAA Luka Koper Average Luka Koper trades at a discount to peers multiples. P/S P/E P/B Company name TTM 212F 213F TTM 212F 213F TTM 212F 213F Piraeus Port 2.4 n.a. n.a n.a. n.a. 1.7 n.a. n.a. Luka Ploce n.a. n.a. Luka Rijeka 4.3 n.a. n.a n.a. n.a. 1.6 n.a. n.a. Thessaloniki Port 2.4 n.a. n.a. 8.8 n.a. n.a..9 n.a. n.a. Hamburger Hafen und Logistik Port of Tauranga South Port NZ 3.3 n.a. n.a n.a. n.a. 3.1 n.a. n.a. Lyttelton Port 2.2 n.a. n.a. 5.6 n.a. n.a. 1.3 n.a. n.a. EUROKAI KGAA Luka Koper Average Company name EBITDA margin TTM EBIT margin (%) Profit margin (%) ROE TTM ROA TTM Assets turnover Div. yield (%) Piraeus Port 31.% 14.9% 9.3% 6.4% 2.6% Luka Ploce 11.2% 1.7% 21.4% 9.7% 6.% Luka Rijeka 7.2% 1.7% -1.4% -3.8% -2.8% Thessaloniki Port 33.6% 27.1% 27.9% 1.8% 9.6% Hamburger Hafen und Logistik 28.2% 17.5% 8.1% 17.3% 5.7% Port of Tauranga 46.2% 36.6% 36.% 9.2% 6.5% South Port NZ 22.3% 32.3% 22.8% 21.4% 16.7% Lyttelton Port 29.5% 18.1% 38.5% 23.6% 14.6% EUROKAI KGAA 2.9% 9.9% 4.7% 6.3% 3.% Luka Koper 33.7% 14.2% 2.3% 1.3%.7% Average 25.6% 17.8% 17.6% 11.2% 6.9% Assets/ Equity Net debt to EBITDA ROE decomposition (company/peer average): EBITDA margin 33.7% 25.6% Assets to Equity EBIT/EBITDA Profit margin ROE 42.2% 69.5% 2.3% 17.6% 1.3% 11.2% ROA NI/EBIT Sales to assets.7% 6.9% 15.9% 99.1%.3.42 Peer valuation target: EUR 13.2 Luka Koper is still trading with lower multiples as most of their peers. While P/E multiple is still heavily influenced by the current write-offs of Intereuropa and other financial investments, EBIT is influenced by high amortization due to CAPEX cycle in previous years. Therefore we focused our valuation on EV/Sales and EV/EBITDA multiples, which imply a value of EUR 13.2 for the share of Luka Koper. We excluded Port of Tauranga due to higher margins, as well as Luka Rijeka high multiples. We also note that a low P/B multiple of.4 gives significant upside to valuation, since the average multiple of the peers is 1.7. The implied value is EUR 28.9, but this has not been used in calculation of the target price. EV/EBITDA /1/22 2/1/25 2/1/28 2/1/211 P/B During best years on the stock market EV/EBITDA topped at incredible 37, as Luka Koper traded above EUR 1 in mid 27. After the stock market crash, the EV/EBITDA multiple 1.. 2/1/22 2/1/25 2/1/28 2/1/211 fell to 6 at the end of 28. Current multiple is well below the historical average of Current EV/EBITDA at 4.4 therefore makes the company look historically undervalued. Luka Koper also currently trades below book value, which stands at EUR P/B is.4, but ROE is just 1.3% / 9

6 Outlook: Good results given economic situation. Margins will slightly decrease. Crucial is the future CAPEX. Following a very good year of 211, Luka Koper continues to deliver strong results despite economic difficulties in the area. Revenues increased by 3.2% YoY in 1H12. The strongest revenue growth driver in 1H12 was vehicle handling where revenues increased by 25%. Business results in 1H12 were therefore slightly better than we expected. Revenues beat our estimates by.7%, EBITDA was better by 3% and net income by 22.1%. Management warned that 2H12 will be more difficult than 1H12. They especially warned that general cargos and bulk and break bulk cargos revenues could decline. Another problem is arising from higher energy prices and higher labour prices which could hamper profitability. Despite more pessimistic view from management we are keeping our forecasts unchanged as we were more bearish at the beginning of the year. We expect to see modest growth in revenues (+1.8%) and EBITDA to reach EUR 48.3m with EBITDA margin shrinking by 1.5 p.p. to 33.7%. Despite recent impairment charge for Intereuropa they still value it at EUR 2.9m. Despite recent commitment from banks for debt to equity swap and more favourable debt restructuring in order to save the company we are keeping our valuation for Intereuropa unchanged at EUR until actual action takes place. Therefore we believe Luka Koper will have to do additional write offs in 212. Net income is estimated at EUR 9.m, so 2H12 should provide only EUR 2.8m of net profit. This is according to expectations that 2H12 will be though. Luka Koper has continued with selective approach to investing in 1H12 as they invested EUR 8.44m, while their CAPEX plan for 212 is EUR 35m. Future investment plan is still unknown with regards to construction of 3 rd Pier or increasing the capacity of 1 st Pier. For now our assumption remains at EUR 34.7m for 212, but positive surprise here (from cash flow perspective) is more likely. all data in EURm Year Sales Sales growth 12.1% -14.6% 1.% 12.7% 1.8% 6.1% 8.3% 7.8% 7.9% EBITDA EBITDA margin 33.7% 3.6% 24.% 33.1% 35.2% 33.7% 33.4% 32.1% 31.9% 32.6% EBIT EBIT margin 19.6% 17.7% -7.2% 1.5% 15.9% 14.9% 15.8% 15.7% 14.9% 13.6% EBT EBT margin 28.3% 12.4% -63.5% -6.% -.7% 7.6% 11.4% 11.4% 9.3% 7.6% Net income Net income growth -43.1% % -95.6% % 191.3% 6.7% 9.2% -1.6% -12.2% Year Fixed assets PPE Intangible assets LT-investments Other fixed assets Current assets Inventories Trade receivables Cash ST-investments Other current assets Total Assets Debt ST-debt LT-debt Provisions Trade payables Other liabilities Minority intrest Equity Year Net profit margin 25.3% 12.8% -58.3% -2.3%.3% 6.3% 9.5% 9.6% 7.9% 6.5% Asset turnover ROA 6.5% 3.1% -12.5% -.6%.1% 1.9% 2.9% 3.% 2.3% 1.8% Equity multiplier ROE 8.9% 5.6% -26.9% -1.2%.2% 3.6% 5.5% 5.7% 5.% 4.2% CAPEX/Depreciation 559.5% 828.7% 312.7% 71.7% 72.5% 128.2% 142.4% 183.6% 328.1% 299.% Financial debt/equity Financial debt/assets Net debt/ebitda Working capital/ Sales -6.4%.9% -9.% 6.% 6.1% 6.5% 4.5% 2.5%.5% 4.5% ROIC 5.4% 4.8% -1.7% 1.% 12.7% 3.9% 4.3% 4.5% 4.% 3.4% 6 / 9

7 Discounted Cash Flow Valuation: Year TV NOPLAT NOPLAT growth n.m. 14.4% 9.% 3.2% -1.6%.% 4.6% 9.9% 12.7% 13.7% -7.7% Depreciation Depretiation/Sales 18.8% 17.6% 16.4% 17.% 19.% 2.1% 2.1% 19.5% 18.5% 17.3% 16.8% CAPEX CAPEX/Sales 24.1% 25.% 3.1% 55.7% 56.8% 4.6% 29.% 2.7% 14.8% 1.6% 17.% Change in net working capital NWC/Sales 6.5% 4.5% 2.5%.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5% FCF to firm FCF valuation Value in forecasting period -7 Continuing value 321 Total enterprise value 315 Net debt 135 Equity value 18 No. of shares (in mio) 14. Equity value per share 12.8 WACC 212 TV Tax rate 18.% 15.% Cost of debt 4.% 4.% Beta Cost of equity 14.6% 2.% Debt/Equity 214.1% 389.2% WACC 6.9% 6.8% Perpetuity growth rate 2.% DCF valuation target: EUR 12.8 In 21 and 211 company kept CAPEX at a minimum (EUR 2m) while paying off debt. This continues in 212, but the company faces next investment cycle (possible construction of third pier) after 213. This is a crucial variable for valuation, affecting cash flow generation, margins and financing, but for now main financial and timetable data is unknown. So this is the main risk for our valuation model. Long term we see EBITDA margin at 31%, while mid-term EBITDA margin is set higher at 33% Terminal growth is at 2.% due to macro environment, while WACC remained at low 6.8%. Implied terminal EV/EBITDA multiple is at 8.. Sensitivity analysis: EBITDA margin Sales growth % 3.% 4.% 5.% 6.% 7.% 8.% 3.% % % % % % % Perpetuity EBITDA margin WACC Perpetuity Growth 1.1% 1.4% 1.7% 2.% 2.3% 2.6% 2.9% 28.% % % % % % % Perpetuity Growth 1.1% 1.4% 1.7% 2.% 2.3% 2.6% 2.9% 5.3% % % % % % % Final target price calculation: Target price is set at EUR 13. We have structured our target price on the basis of 5% weight from peer analysis and 5% DCF analysis. Based on current forecasts we are lowering our target price from EUR 13.7 to EUR 13., keeping a buy recommendation. Given current multiples, stabile top-line history and stabile shareholder structure we believe Luka Koper is a good infrastructure investment, but it lacks dividend payment. 7 / 9

8 Top5 shareholders: Republic of Slovenia 51.% SOD 11.1% KAD 5.% Municipiality Koper 3.3% KD GALILEO fund 1.1% Brief Company profile Luka Koper is Slovenia s sole port which provides port and logistics services to the economically developed town of Koper and nearby region. Providing warehousing and cargo handling services for all types of goods, Luka Koper also serves Central and Eastern Europe. In recent years it is increasing its reach and efficiency by building a network of in-land terminal centres. Luka Koper services are outlined as follows: Cargo handling. The handling of cargo both into and out of the port. It s handling liquid, dry bulk, general cargoes, vehicles and containers. Warehousing. The storage of cargos before onward movement into or out of the port. Specialised goods. The handling of specialised goods that require specialist treatment. Additional services. Group sales by region (211) Group sales by segment (1H12) Hungary 1% Other 16% Slovenia 3% Bulk and break bulk cargos 42% General cargos 8% Container freight 3% Italy 11% Austria 33% Vehicles 4% Liquid cargos 16% Disclaimer GENERAL DISCLOSURE The research department of ALTA Invest, investicijske storitve, d.d. (eng. ALTA Invest, investment services, Inc.), is, in order to avoid and deter conflict of interests, a separate organizational part of the company. It is independent in its decisions about selecting, monitoring and updating its investment recommendations of an individual issuer. According to its information policy, ALTA Invest, investicijske storitve, d.d. provides data privacy and strongly defends accessibility to the data bases and other materials of the research department, against any unauthorized personnel. 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Facts, on which the document is grounded, are clearly differentiated from the interpretations, assessments, opinions and other information, which are not facts. Projections, forecasts and target prices are marked and the document clearly shows main assumptions on which they are based, but are subject to change without notice. The document can also consist of historical data about the profitability of financial instruments, however past performance is not necessarily indicative of future results. For the purposes of this document the financial analysts of ALTA Invest, investicijske storitve, d.d. have gathered the data, reformed it and processed it accordingly to the principles of fairness and with special care of the individuals, which deal with the formulation of recommendations professionally. 8 / 9

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Furthermore, settlement and custodial risk in emerging markets may be higher than in markets where there is a long established infrastructure. Stock liquidity may be impacted by the number of market participants which may therefore impact upon the reliability of any investments made as a result of acting upon information contained in this document. Further risks not discussed in this document may apply to the discussed security. Investors should always investigate the various risk aspects of any security in any market before making an investment decision. We advise investors contacts appropriate investment consultants or brokers to gather additional information. The selling price of financial instrument is usually not known in advance and can differ from the expected target price used to calculate expected gross return. Therefore realized and expected gross return can differ. Also investor must take into account that provisions, trade cost and taxes will influence final net return earned by difference between purchase and selling price of financial instrument. The difference can be positive or negative and cannot be forecasted in advance. In addition, all investors should be aware of the possibility of the failure to reach forecasted events and assumptions of the valuation on which the document is based, as well as the possibilities of price fluctuation of a particular financial instrument issuer. In the case of unfavourable movements of the price of a particular financial instrument, there is a possibility of lower future value of the investment, compared to the initial (purchase) value or vise versa. If a financial instrument is denominated in a currency other than an investor s currency, a change in exchange rates may adversely affect the price or value of, or the income derived from, the financial instrument, and such investor effectively assumes currency risk. The reader of the recommendation should first also be aware of the large impact of chosen assumptions at predicting the target price of the financial instrument issuer, which is presented also in the sensitivity analysis, as well as the facts that past performance is not necessarily the indicator of future profitability of the financial instrument issuer and vice versa. ALTA Invest, investicijske storitve, d.d. accepts no responsibility for any damage or loss arising from the use of information in this document. BUY: The investment rating reflects the total expected return (the difference between the current price of the stock and estimated price, expressed in %, and the estimated dividend yield) for a potential investment in the 12-month period from the date of the initial rating, which is more than 1%. HOLD: The investment rating reflects the total expected return (the difference between the current price of the stock and estimated price, expressed in %, and the estimated dividend yield) for a potential investment in the 12-month period from the date of the initial rating, which is between % and 1%. SELL: The investment rating reflects the total expected return (the difference between the current price of the stock and estimated price, expressed in %, and the estimated dividend yield) for a potential investment in the 12-month period from the date of the initial rating, which is lower than 1%. NO RECCOMMENDATION / EVALUATION: No recommendation can be given on the basis of the data available. In the period between and the structure of all investment research was: Number Share Share of issuers, for which ALTA Invest, investicijske storitve, d.d., has provided investment services regarding financial instruments in last 12 months Buy 42 61% 1% Hold 15 22% % Sell 12 17% % Recommendations issued by ALTA Invest, investicijske storitve, d.d. Železna cesta 18, 1 Ljubljana, are valid for 12 months, except in case of previous update of the recommendation. However, ALTA Invest, investicijske storitve, d.d. is not engaged in periodical updating of the recommendations of the issuer under consideration as well as is not obliged to notify readers about any kind of valuation, opinion or forecast changes, which have arisen from the occurrences after the recommendation release. When dealing with its customers, ALTA Invest, investicijske storitve, d.d. is not obliged to act in accordance with opinions and assessments expressed in investment recommendations. Financial analyst, who has prepared the document and other individuals, which are familiar with the time and content of the investment research, did not have any personal transactions or trade with the relevant financial instrument from the investment research or haven't been connected with the financial instruments in time during the preparation of the investment research and one day after. Specific disclosures of the issuer under consideration ALTA Invest, investicijske storitve, d.d. Železna cesta 18, 1 Ljubljana, Slovenia, and financial analyst responsible for monitoring of the issuer under consideration, guarantee that this document has not been disclosed to the issuer of the financial instrument before it was publicly released. ALTA Invest, investicijske storitve, d.d. and its related legal entities can own shares of the issuer under consideration. A financial analyst responsible for monitoring of the issuer under consideration does not have any significant financial interests concerning the financial instrument. They also do not have any conflict of interest concerning the issuer under consideration. In the last 12 months, ALTA Invest, investicijske storitve, d.d. has performed services concerning financial instruments to the issuer under consideration. ALTA Invest, investicijske storitve, d.d. and related entities could hold securities of the relevant issuer. Statement of a financial analyst ALTA Invest, investicijske storitve, d.d. (eng. ALTA Invest, investment services, Inc.), and the undersigned financial analysts, responsible for monitoring of the issuer under consideration, declare that they have not received any kind of compensation, which could affect the formulation of this recommendation or opinion expressed in this document. The recommendation has not been disclosed to anyone before it was publicly released. Matej Justin, Analyst On the day of the public release, the author of the recommendation did not held securities of the relevant issuer. Sašo Stanovnik, Head of research On the day of the public release, the author of the recommendation did not held securities of the relevant issuer. First release of the recommendation was performed on Quarterly updates are planned for data, valuation, target price and recommendation. Other information Other information about the services of ALTA Invest, investicijske storitve, d.d. and financial instruments, including general conditions for provision of services, price list and other disclosures can be found at and ALTA Invest, investicijske storitve, d.d., Železna cesta 18, SI-1 Ljubljana. Registered at the District Court of Ljubljana, Registration Number: , ID for DDV: SI , Share capital: 2.31,83. EUR. 9 / 9