Investing for Beginners , investing

investingforbeginners.eu My wheels are running. My investments are local, regional and international.
Prince Alwaleed Bin Talal Alsaud

    Baltic Investment

    2012 Mar 1

     

    Baltic Stock Exchange

     

    Baltic stock exchange now belongs to the world gigantic stock exchange NASDAQ OMX, and now is called NASDAQ OMX Baltic. Historically Lithuania, Latvia and Estonia had their own national exchanges but those were acquired by OMX and that one was acquired by NASDAQ. 

     

    Why am I writing about these tiny markets? Well, there are few reasons. One of those reasons is that Baltic markets are my home markets and I know these very well. The second reason is that even small markets have some real ‘pearl stocks’ that might be interesting for any small investor despite low the liquidity. 

     

    Baltic Stock Market

    As standard definition of Baltic markets should include three different markets: Lithuanian market, Latvian market and Estonian market, we will see those markets as one in here. I won’t describe economical environment because it would be too much of content in here, but I can assure you that economical position of Estonia is perfect, while Lithuanian and Latvian economies are in little worse shape, but still are doing well enough now according to the all European economical environment. 

     

    For you, my friends, I picked those stocks that look for me as the most attractive investments. Some of those have higher liquidity some lower, but I do believe that all of them can be acquired and sold quite smoothly over longer period, and investing in stocks never was short-term thing…

     

     

    Let’s look at those top stock picks:

     

    1. Olainfarm – generic pharmaceutical company


    Olainfarm is a small Latvian pharmaceutical company that manufactures various medicines and sells it mostly in Russia and other CIS countries. Sales in Latvian market constitute only 7 percent of total sales while 37% go to Russia and 26% go to Ukraine.

     

    Active company’s management led to amazing financial results during last year and earnings are expected to increase further. Relative valuation of the company looks very attractive keeping in mind bright future prospects of the company.

     

    Olainfarm financial data:

    Stock price, EUR 4.30
    P/E 6.2
    EV/EBITDA 4.7
    EV/S 1.3

     

        2009 2010 2011
    Sales mEUR 31.9 35.6 52.2
    EBITDA mEUR 8.0 9.1 14.6
    Net income mEUR 3.4 5.0 9.7
    EBITDA margin   25% 25% 28%
    Net margin   11% 14% 19%

     

    2. Grindex – half generic / half patent pharmaceutical company

     

    Grindex is another small pharmaceutical company based in Latvia. The structure of sales is very similar to Olainfarm (which is mentioned above) and sales in Russia accounted for 55 percent of total sales. The main weakness of the company is that it is highly dependable on the main product (Mildronate). 

     

    The financial results of the last year wasn’t very impressive, and net income decreased during last quarter but good gross income shows the strong position of the company. Grindex has invested a lot during last couple of years in new manufacturing units and is consistently registering new medicines in new markets and has a lot of potential to increase profit. 

     

    Grindex financial data:

    Stock price, EUR 7.0
    P/E 7.1
    EV/EBITDA 5.6
    EV/S 0.9

     

        2009 2010 2011
    Sales mEUR 76.2 92.7 99.0
    EBITDA mEUR 8.1 16.6 15.2
    Net income mEUR 5.1 10.1 9.5
    EBITDA margin
    		11% 18% 15%
    Net margin   7% 11% 10%

     

     

    3. Silvano Fashion Group – lingerie manufacturing company


    Silvano Fashion Group is based and listed in Estonia but it is not purely an Estonian business model. Silvano Fashion Group owns two main brands: Milavitsa and Lauma Lingerie. The first one is manufactured in Belorussia and the manufacturing of another is based in Latvia. Russian market accounts for 62 percent of total sales and Belorussia for 22 percent of sales. 

     

    During last quarters company was affected by currency’s devaluation in Belorussia, however, the long term effect will be positive as company mostly exports products from Belorussia to Russia, so weaker currency in the production country is decreasing manufacturing costs. Stocks of the company are extremely cheap on price-to-earnings basis. 

     

    Silvano Fashion financial data:

    Stock price, EUR 3.3
    P/E 3.1
    EV/EBITDA 3.8
    EV/S 1.0

     

        2009 2010 2011
    Sales mEUR 74.0 93.3 107.8
    EBITDA mEUR 6.3 19.4 29.7
    Net income mEUR 1.4 15.1 42.3
    EBITDA margin   8% 21% 28%
    Net margin   2% 16% 39%

     

     

    The main criteria for selection of the stocks were attractive relative valuation (low valuation multiples) and good prospects for the future results. All the mentioned stocks are exporters and do not depend very strongly on local markets. However, all of those have high exposure to Russia which is booming on high oil prices. 

     

    As you can see there were no stocks from Lithuania but it does not mean that there are no interesting stocks in Lithuania. But maybe another time about those…

     

     

    Disclaimer

    In this article I provided the facts about some interesting stocks; but in neither way these facts or my opinion can be treated as an investment recommendation. You should make your own analysis of the stock and decide whether it is worth investing or not. 

    An author of the article might have been invested in stocks/assets that are mentioned on the article directly or indirectly. 

     

     

    By Rokas Lukosius

     

    Read next article: How to Beat the Stock Market

     

    Other articles you may like:

    Investment in Bulgaria

     

    Investing in Russia

    Investing in Africa

     




    Name:
    E-mail:
    Text
    Security Code:
    (Use only capital letters and numbers. If you can not see the code, click on the image.)
    You are solely responsible for all content you post to the site.
    investingforbeginners.eu reserves the right to edit or delete any and all reader comments.

    Tips to let small business investments take offHow Investment Horizon Affects Your Investment Portfolio?How Oil Price Influence Investment Markets?The best investment is education? Go figureInvesting in financial institutions: why and how?Learning the basic investment concept: a good start in investingInvestment psychology gains momentum in contemporary business worldThe Most Known Investors: Who are they?Putting Investment Indicators from Economy to Good UseIs the Bubble of Commodities Going Down?What means long term in investing?European Dividend StocksBaltic Investment How to Beat the Stock MarketProblems in Greece: Is It Going to End?How ECB Is Affecting Investment Markets?Bond Investment: Government Bonds and Corporate BondsFoundation of the Europe’s Financial MarketStocks Riskier than Bonds?Where Are the Investment Markets Moving Now?US Debt ReliefInvesting in Land - Agricultural REITsWhat to Do With Investments in Current Turbulence?Investment in BulgariaInvesting in RussiaInvesting in AfricaInvesting in Uncertain PeriodInvesting in Gold (II)Investing in Gold (I)

    Last searches: sell , investment fund management , pref , stock prices , peg , picking , operating expenses , adjusted , volatility , partnership , investing , investment , beginners , stocks