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Books on Slovenia
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Update No: 122 - (26/07/07)
The top performer
Slovenia is an undoubted success story. But one can have too much of a good
thing.
Slovenia started using the euro in January and its US$35 billion economy
expanded 7.2 per cent in the first quarter, the fastest pace since 1999.
Government-owned pension funds fuelled the equity market. Local mutual funds
also bought the shares as Slovenians' savings rose. Foreigners hold about 5 per
cent.
A hotter share market than China's; the best in the world
Slovenia's share rally has made its equity market more expensive than China's.
Now, however, investors say it is time to sell. "We are gradually reducing
Slovenian shares because the market feels hot," said Jernej Kozlevcar, who
manages about US$742 million ($A866 million) at Triglav Asset Management in
Ljubljana. "Recent growth of the market is mainly based on speculation
about consolidation and less on business results."
The Slovene Stock Exchange Index (SBI20) was the best-performing equity
benchmark in the world last quarter, jumping 39 per cent in dollar terms,
according to Bloomberg data.
It has more than quadrupled since 2002, paced by petroleum company, Petrol, and
logistics company, Intereuropa.
SBI20 companies trade at an average of 38.9 times estimated earnings, more than
twice as much as their average for the past year. The price-earnings ratio is
also more than double that of the Morgan Stanley Capital International Emerging
Markets Index, a global gauge for developing economies. China's CSI 300 Index
members trade at 32.9 times earnings.
But there are still optimists around
Not everyone predicts an end to the rally. Merger and acquisition speculation
would continue to support shares, said Sasa Mohorko, a broker at Slovenian
brokerage Publikum. "I don't think the market is risky," he said.
"The second half of the year will be bullish."
The Government plans to sell 39 per cent of Telekom Slovenije next month. That
has helped increase the share price by 55 per cent. Intereuropa shares doubled
this year on anticipation that the state will sell its holding. Private
ownership would make it easier for foreign businesses to take over companies in
Slovenia.
Even so, none of the asset sales that Prime Minister Janez Jansa promised when
he took power in 2004 have come to pass.
New bank governor
The governor of the Central Bank is a most important post in Slovenia. Its
parliament on July 10th approved a new Central Bank governor, after months of
political wrangling.
Marko Kranjec, 67, a prominent economics and financial expert who was the young
nation's first finance minister and once worked at the World Bank, was supported
by 74 deputies in the 90-seat chamber. One voted against him, others abstained.
Kranjec is the Slovenian equivalent of Poland's Leszek Balcerowicz, who charted
its reform course in the 1990s and was called back to the Polish Central Bank
earlier this decade as the indispensable man (his stint ended in January,
however). Kranjec is the central bankers' central banker, absolutely reliable
and full of integrity. The economy could not be in better hands.
Slovenia's Central Bank was without a governor - who automatically is a member
of the European Central Bank - for nearly three months as a result of President
Janez Drnovsek and Prime Minister Janez Jansa's argument over the candidates.
Parliament, dominated by allies of Jansa's central-right government, had
rejected two previous Drnovsek candidates.
The dispute threatened to damage the image of Slovenia, which adopted the euro
on Jan. 1 and won plaudits for its smooth transition to the single currency. The
two leaders eventually agreed to support Kranjec.
Jansa Meets European Commission Officials over EU Presidency
Slovenia is gearing up to assume the EU presidency within six months. Prime
Minister Janez Jansa met in Ljubljana on Friday, 13 July Joao Vale de Almeida,
head of cabinet of the President of the European Commission, and
Secretary-General of the European Commission Catherine Day. The officials
discussed Slovenia's plans for the EU presidency in the first half of 2008.
According to a press release from the prime minister's office, Jansa acquainted
the high-ranking officials with the topics Slovenia has set as its presidency
priorities.
These include the reform of the institutional basis of the EU, energy, climate
change, intercultural dialogue, the Western Balkans, and the Lisbon Strategy.
The officials also discussed the intergovernmental conference on the EU reform
treaty, which was to start on 23 July. Slovenia is hoping that the treaty will
be signed during Portugal's EU presidency, which would provide enough time for
ratification. Slovenia will closely monitor the ratification procedure, the
press release reads.
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AVIATION
Adria Airways increases passengers in H1 by 7%
Adria Airways recently announced that in the first half of 2007, it carried
478,372 passengers, up by seven per cent over the same period last year, Slovene
Press Agency recently reported.
The company also increased the number of its scheduled flights by eight per cent
in the same period, as well as operating 18 per cent more charter flights. Its
cabin occupancy rate stood at 70 per cent, Adria was cited as saying, adding
that the capital injection and purchase of two new Canadair Regional Jet CRJ900
planes were the main business developments in the first two quarters of the
year. Meanwhile, the revenues of Adria's maintenance centre for CRJ aircraft
were up by 64 per cent; and a total of 43 service checks were carried out in the
period. The company also expanded its services to maintain Airbus airplanes and
plans to construct a third hangar to further expand its aircraft maintenance
business. Adria Airways is Slovenia's flag carrier.
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FOREIGN EXPANSION
Big companies eyeing expansion in Croatia
Several big Slovenian companies have announced plans to expand in Croatia,
Slovene Press Agency reported on June 12th, cited by Reporter.gr.
The Croatian market is not only of interest to Slovenian companies, but also
affords investment capital which is desirable in Slovenia, Bostjan Tancer, a
member of the management board of KD Asset Management, was cited by the news
source as saying. Financial firm KD Holding, port operator Luka Koper, retailer
Mercator, energy company Petrol, telco Telekom Slovenija and spa operator Terme
Catez recently unveiled their plans to expand in Croatia. Mercator announced new
shopping centres in Zagreb, Rijeka and Labin, Slovene Press Agency reported. KD
Holding wants to expand on the Croatian insurance and banking market and Terme
Catez would like to enter the market, it was reported.
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MANUFACTURING
Kovinoplastika Loz takes majority stake in Loz-based manufacturer
The company established by the senior employees of the plastics and steel
fittings maker Kovinoplastika Loz has acquired a 41.84 per cent-stake in the Loz-based
manufacturer. This brings its total stake in the company to 61.99 per cent, the
nominee company said, Slovene Press Agency reported on June 26, cited by
Reporter.gr.
The nominee company offered 16.6 Euro per share in cash in a public bid. This
brings the total paid for the additional stake to 19.6 million Euro. The major
sellers were the state-run Restitution Fund (SOD) and Pension Fund Management (KAD),
which held a combined stake of 26.34 per cent.
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PHARMACEUTICALS
Krka presents new 80m Euro Sinteza 4 plant
Pharma Company Krka presented its 80 million Euro plant, which will manufacture
active ingredients, Slovene Press Agency reported on June 13th, cited by
Reporter.gr.
The Sinteza 4 plant will enable Slovenia's largest drug maker to produce most of
active ingredients by itself, which its CEO, Joze Colaric, said would increase
value added, cut costs and improve its competitive ability. The plant in Novo
Mesto will also allow Krka to mount a more efficient defence against lawsuits,
it was reported. Quite a few have been filed against Krka, Colaric was cited as
saying, adding that the majority of them were related to the process of chemical
synthesis. In what the chairman termed as one of Krka's largest and most
demanding investments, Sinteza 4 will supply ingredients for the company's
plants in Novo Mesto, Croatia, Poland and Russia. Sinteza 4 launched production
in August last year. Slovenia's 2007 Euro changeover allowed many foreign
investors to buy Krka's shares, it was reported.
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SHIPPING
German Doehle acquires majority stake in Splosna plovba
German ship owner, Peter Doehle, has become the majority owner of Slovenian
shipping company, Splosna plovba. This came after it bought a 29.65 per cent
stake put up for sale by the state-run funds KAD and SOD, Slovene Press Agency
reported on June 27th, cited by Reporter.gr.
The buyer, which owned over 20 per cent prior to the bidding, paid 55.5 million
Euro for the stake, at the starting price of 40 million Euro, it was reported.
Port operator Luka Koper and investment firm Mercata also bid for the stake. KAD
and SOD remain strategic owners of Splosna Plovba, keeping 25 per cent plus one
share.
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TRANSPORT
DARS to construct 13 kilometre motorway
DARS recently inked an 80.13 million Euro deal for the construction of a 12.9
kilometre motorway section between Slivnica and Drazenci, Slovene Press Agency
reported on July 11th, cited by reporter.gr.
The works have to be completed in 24 months, DARS was cited as saying. The
companies constructing the section, SCT Ljubljana, Primorje Ajdovscina, Gradis
skupina G Ljubljana, CPM Maribor, Vegrad Velenje and Strabag Austria, will
construct three motorway exits, 10 flyovers and several other facilities,
including a service area, it was reported. This is the last of three contracts
for the section between Slivnica and Drazenci. DARS is a Slovenian motorway
company.
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