Equity Weekly

Equity Research - Monday, August 3, 2009

Index value Weekly Change,% Weekly Turnover

Baltic Indices
255 Estonia 297.9 -1.36% €1,8m

245 The activity on OMX Tallinn remained calm. The turnover amounted to €1.8m
last week and the index declined by 1.36% W-o-W to 297.9 points. Institutional
interest was seen in Harju Elekter which share price improved 17.2% W-o-W last
235
week.

225
Latvia 258.6 0.64% €95k
215
Activity on OMX Riga was very low during last week. OMX Riga index gained
205 0.64% and closed at 258.64. Big fluctuations were seen in SAF Tehnika shares
30-Apr 14-May 28-May 11-Jun 25-Jun 9-Jul 23-Jul
(0.49-0.69 LVL), shares price rose during the week by 23.21%. Shares of
Baltic Benchmark OMX Tallinn* Ventspils Nafta were also very volatile, price changed in range 0.98-1.16 LVL,
OMX Riga* OMX Vilnius* during the week price decreased by 4.76%. Biggest trading volumes were in
* Relativ e to Baltic Benchmark Source: Reuters, Swedbank Olainfarm shares – 21,654 shares traded (13 267.33 LVL). Some interest
appeared in Valmieras Fiberglass shares, price for the week grew by 6.25%
from 0.32 to 0.34 LVL.
Last Weekly Weekly P/E P/BV
Estonia (in €) Close Change Volume Trail. 4Q 09F Last Q 09F
Arco Vara 0.13 0.0% 809316 -0.2 -1.6 0.3 0.3
Lithuania 193.7 3.02% €3,8m
Baltika 0.55 0.0% 72834 -1.3 -2.0 0.8 0.7
Eesti Telekom 4.30  -3.4% 99717 7.3 9.1 2.9 2.4
Ekspress Grupp 0.61  1.7% 14631 3.7 2.7 0.3 0.3 Last week TEO LT gained 3.3% to LTL 1.26, weekly turnover was €1.94m. After
Harju Elekter 1.57  17.2% 60813 13.1 33.8 1.1 1.1
the manager of related company to Snaige announced about the sell off of
Järvevana 0.26  -7.1% 106871
Snaige shares, the stock plummeted 23% WoW to LTL 0.40. Apranga lost 3% to
Merko Ehitus 3.35  1.5% 83291 5.3 -26.1 0.4 0.5
Nordecon International 0.85  -4.5% 43950 3.8 -16.1 0.5 0.6
LTL 1.89. Ukio Bankas closed flat at LTL 0.70.
Norma 2.60  2.0% 6520 8.7 9.3 0.6 0.6
Olympic Entertainment Group 0.53  -3.6% 19075 -2.7 -25.1 0.7 0.6
Silvano Fashion Group
Tallink
0.35
0.31
 -7.9%
 -3.1%
361008
1515062
-1.3
44.9
-25.8
-33.1
0.4
0.3
0.3
0.3 Estonia
Tallinna Kaubamaja 2.84  9.2% 24713 -49.6 300.4 1.0 1.0
Tallinna Vesi 8.40  -0.6% 8801 8.9 9.0 2.3 2.0
Viisnurk 0.44  -12.0% 69480 131.2 2.8 0.4 0.4 Tallinna Vesi last week announced it has made amendments to the
Last Weekly Weekly P/E P/BV agreement with the City of Tallinn: in short, nothing that would change our
Latvia (in LVL) Close Change Volume Trail. 4Q 09F Last Q 09F
target price or recommendation as simply the construction prices and
Grindeks 3.70 0.0% 1341 3.9 5.4 0.7 0.7
Latvian Gas 4.05  1.0% 1840 8.0 0.5
compensation period has been renegotiated down due to lower construction
Latvian Shipping Company 0.47  2.2% 12507 1.8 1.3 0.2 0.2 prices. The net impact is the same. Target price €13.1, “Buy”.
Latvijas Balzams 1.30  9.2% 4914 4.4 0.3
Liepajas Metalurgs 0.84  2.4% 7623 0.8 0.2 Last week Baltika reported Q2 figures. Situation is not as critical as it was in
Olainfarm 0.62  -1.6% 21654 -7.7 24.9 0.6 0.5
Q1, but still difficult as company continues to burn through the inventory,
SAF Tehnika 0.69  23.2% 16381 -2.3 1.0 0.3 0.2
Valmiera Fibre Glass 0.34  6.3% 17793 0.6 0.3
punishing the gross margin and leaving no room for any profits. The
Ventspils Nafta 1.00  -4.8% 560 2.9 0.3 company is looking to turn things around in 2H and focus on getting into
Last Weekly Weekly P/E P/BV black in 2010. The cost cutting measures announced seem on the limit – i.e.
Lithuania (in LT L) Close Change Volume Trail. 4Q 09F Last Q 09F
of sales do not slump further they will be sufficient but if we are to see more
Apranga 1.89  -1.6% 508280 14.6 -2.8 0.8 0.7
City Service 5.37  2.3% 42613 9.4 6.4 1.6 1.3
declines then company will be in a squeeze once again. Operationally the
Grigiskes 0.58  20.8% 292406 -7.6 0.5 preferred share issue means company has enough working capital this year.
Invalda 1.46  -2.0% 126308 -0.5 0.4
Klaipedos Nafta
Lietuvos Dujos
0.95
1.32
 -4.0%
 6.5%
80017
228059
12.1
15.5 9.9
0.8
0.3 0.3
Latvia
Lietuvos Energija 2.05  -1.4% 27113 -39.2 0.5
Lietuvos Juru Laivininkyste 0.38  -2.6% 95455 -1.9 0.4
No Corporate News.
Lifosa 26.20  1.6% 6379 3.5 0.7

Lithuania
Panevezio Statybos Trestas 2.50  -2.0% 246879 1.4 0.4
Pieno Zvaigzdes 2.50  15.2% 64034 16.1 4.5 0.9 0.8
Rokishkio Suris 2.22  3.3% 42272 -9.8 0.5
RST 1.65  6.5% 100446 -9.3 0.3
Sanitas 7.70  4.1% 14284 -9.4 1.0 For the 6 months of 2009, Bankas Snoras earned pre-audited net profit of
Siauliu Bankas 0.70 0.0% 138018 2.8 0.4
almost LTL 24m (€ 6.9m), i.e. up 35.5% YoY. In 1H2009, the group earned
Snaige 0.40  -21.6% 2905059 -0.4 0.2
Snoras 0.57 0.0% 840794 0.8 0.2
net profit of LTL 4.2m (€1.2m), compared to LTL 36.8m (€10.7m) profit a
TEO LT 1.26  3.3% 5433387 6.2 6.6 0.9 1.0 year ago.
Ukio Bankas 0.70 0.0% 1221328 0.8 0.3
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 – August 3, 2009

On Wednesday dairy manufacturer Rokiskio Suris announced about the buy-back of

1’516’600 of company’s shares for LTL 3.34m (€0.97m). As a result, the treasury shares
increased to 10% (previously 6.45%) of authorized capital. The treasury shares will be
annulled in order to obtain the ability to purchase own shares according to the law on joint
stock companies at par value of not more than 1/10 of the authorized capital. The pay day
of the acquired shares is July 31, 2009.
On August 31, the company summons the Extraordinary General Meeting of Shareholders
regarding the decrease of the authorized capital by annulment of treasury shares. The
record date for EGM is 24 August.
In Q2, the revenue of Pieno Zvaigzdes dropped 14.5% YoY to LTL 156.3m (€45.3m).
However, EBITDA soared by 39% YoY to LTL 16.4m (€4.7m). Net profit amounted to LTL
2.7m (€0.78m), compared to net loss of LTL 1.5m (€0.43m) a year ago. The reported
revenues in 1H2009 dropped by 10% YoY to LTL 299.9 m (€86.9m). EBITDA doubled to
34.3 m LTL (€9.9m) Net profit totaled LTL 6.6m (€1.9m) compared to net loss of 10.3 m
LTL (€3m) in 1H2008.
As well, Pieno Zvaigzdes provided new estimate for 2009: sales are expected to be LTL
639m (€185m), 7.3% lower compared to initially budgeted LTL 689.1m (€199.6m). Net
profitability margin expected at 3.0%, lower compared to initially budgeted 3.5%.
The preliminary consolidated sales of Zemaitijos Pienas for IH2009 amounts to LTL
186.8m (€54.1m), i.e. down by 20.5 % YoY. The consolidated unaudited loss was LTL
1.9m (€0.55m), compared to LTL 10.4m (€3m) loss last year.
In 1H2009 the consolidated income of Lietuvos Energija increased by 22% YoY to LTL
827.4m (€239.6m). The company incurred loss before taxes of LTL 31.3m (€9.1m),
compared to profit before tax of LTL 60.2m (€17.4m) a year ago. Net loss totaled LTL
26.4m (€7.6m), contrasting to net profit of LTL 50.7m (€14.7m) in 1H2008.
VST experienced negative preliminary non audited activity result – LTL 4.47m in (€1.29m)
loss in the 1H2009.
The revenue of cargo shipping company Limarko laivininkystes kompanija decreased by
7% YoY to LTL 71.6m (€20.7m) in 1H2009. EBITDA dropped 17% YoY to LTL 16.1m
(€4.7m) and the EBITDA margin was 23% (prev. 25%). The loss amounted to LTL 2.2m
(€0.6m), compared to pre-tax profit of LTL 11.8m (€3.4m) a year ago.

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

Equity Research – Swedbank Markets Page 2 of 5

 Equity Weekly – August 3, 2009

Investor Calendar:
Date Description
Estonia
03.-07.08.2009 OEG - Interim report Q2 2009
03.-07.08.2009 HAE - Interim report Q2 2009

Latvia
5.08.2009 SAF1R - 12M non-audited financial report
7.08.2009 GRD1R - 6M non-audited financial report
10.08.2009 RRR1R - Extraordinary General Meeting

Lithuania
3.08.2009 APG1L - Retail turnover in July 2009
5.08.2009 RSU1L - Preliminary turnover of the Group for July and 7M 2009
6.08.2009 KJK1L - Closing date for execution of mandatory tender offer

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 – August 3, 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
Neringa Džiugelytė Lithuania Marko Daljajev Estonia
neringa.dziugelyte@swedbank.lt +370 5 268 4733 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
Neringa Džiugelytė Lithuania Lauri Lind Head of Baltic Equity Capital Markets
neringa.dziugelyte@swedbank.lt +370 5 268 4733 lauri.lind@swedbank.ee +372 6 131 355
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: 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 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.

Buy
Under 45%
Recommendations by the 03 aug 2009
Rev iew
No of shares Part of Total 55%
Buy 10 45%
Under Review 12 55%

Equity Research – Swedbank Markets Page 4 of 5

 Equity Weekly – August 3, 2009

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