Bulgarian Stock Market Overview

07.09.2010

Stocks Climb After Earnings Reports

Bulgarian capital market broke its two-week losing streak and stocks ended mostly higher Friday, with the SOFIX index gaining 1.47% to 392.81. The rally followed a series of consolidated corporate earnings reports that showed hints of strength returning to the Bulgarian economy. The broader BG40 added 1.26% to 112.08. Total turnover was lifted to BGN 11.35 mln by OTC deals worth BGN 5.77 mln. In the regular trading, Chimimport [6C4] was the most liquid company with a turnover of BGN 1.03 mln. Sopharma also saw heavy trading as more than 138.5 thousand shares changed hands in a turnover of BGN 547.24 th.

Share price of Kaolin [6K1] surged 7.29% on promising financial figures for the second quarter. Revenues of the mineral extracting company surged by 31.4% y-o-y to BGN 41.010 mln in April – June, accelerating from a growth rate of 18.8% in the first three months of the year. Six-month sales totaled BGN 69.649 mln, up by 25.9% y-o-y. The improvement was driven largely by significantly higher sales of products for the ceramics industry, where exports increased substantially. The net profit rose by 7.6% y-o-y to BGN 4.309 mln but profitability narrowed to 6.20% from 7.20% a year earlier as operating expenses increased at a faster pace than revenues.

Last week Kaolin announced the end of its conversion procedure, in which its shareholders were able to swap one share in Kaolin into 26 shares of Solarpro Holding [0S8], in which Kaolin held a stake of 85.54% through its fully-owned subsidiary Solar Ventures. A total of 1,330,002 shares of Kaolin (5.32% of the registered equity and 85.12% of the total amount of shares available for conversion) have been converted into 34,580,052 shares of Solarpro Holding (73.95% of the registered equity). After the conversion, Solar Ventures owns a stake of 11.59% in Solarpro Holding.

Meanwhile, Solarpro Holding reported revenues of BGN 1.049 mln for the first six months of the year. Total operating expenses and depreciation came at BGN 1.648 mln. Income from financial operations amounted to BGN 573,000. Earnings before taxes were negative at BGN 26,000 but net profit after minority interest was BGN 73,000. Comparative figures are not relevant as the company was actually established in December 2009.

ERG Capital 1 [6EA] and ERG Capital 2 [6ER], two of the real estate investment trusts (REITs) of Bulgarian American Credit Bank [5BN] (BACB), were in focus last week as they struck a preliminary deal to sell their entire property portfolios, comprising four commercial buildings in Sofia and Varna, for a combined amount of EUR 27 mln. After the announcement, share price of ERG Capital 2 [6ER] soared 58.5% y-o-y to BGN 4.20, and ERG Capital 1 [6EA] jumped 36.9% to BGN 3.56 in slim volumes. BACB itself added 2.95% to BGN 11.20 per share last week. Later during the week it was announced that the buyer is Bluehouse Capital, a Greek private equity real estate investment company with a focus in South East Europe. ...

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