Equity Weekly

Equity Research - Monday, May 11, 2009

Index value Weekly Change,% Weekly Turnover

Baltic Indices
Estonia 289.5 4.17% €4.4m
245

230 Most of the shares ended last week in green. Estonian Telekom, Merko and
Tallink were most actively traded. In Estonian Telekom one bigger seller
215 finished selling, in Merko also one bigger seller was on the market. Tallink
gained nicely as several bigger buyers were present.
200

185 Latvia 227.3 1.6% €0.3m

170
Market remained rather calm in the most of names. Some activity was seen in
8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May
Grindeks where 54thousand shares were traded, most of turnover came from
Baltic Benchmark OMX Tallinn* two block trades. Share closed week by 1.20% higher to LVL 2.53. The Company
OMX Riga* OMX Vilnius*
also informed about 1Q results which was broadly in line with expectations and
* Relativ e to Baltic Benchmark Source: Reuters, Swedbank didn’t leave any significant impact on share price.

Last Weekly Weekly P/E P/BV Lithuania 163.6 0.92% €2.6m

Estonia (in €) Close Change Volume Trail. 4Q 09F Last Q 09F
Arco Vara 0.13  30.0% 1102463 -0.2 -1.6 0.3 0.3
Baltika 0.57  23.9% 254893 -8.8 0.6
Some positive sentiment was seen on the VSE: last week the OMXV index went
Eesti Telekom 4.84  -1.2% 370831 7.3 8.0 2.4 2.5 up by 0.92%. Weekly turnover comprised €2.64m: 2/3 of it came into TEO LT
Ekspress Grupp 0.65  6.6% 19136 3.9 2.9 0.3 0.3 shares, which gained 1.56% WoW to LTL 1.30. The biggest loser on the market
Harju Elekter 0.89  -3.3% 60524 7.4 19.2 0.6 0.6 was Invalda: shares lost 21.4% of value WoW and were traded for €169.5
Järvevana 0.26  23.8% 13255 thousands. Apranga shares went up by 8.61% and turnover was €144
Merk o Ehitus 2.45  6.5% 458467 2.3 3.9 0.3 0.3 thousands.
Nordecon International 0.69  4.5% 114967 1.4 1.8 0.4 0.4
Norm a 2.75 0.0% 26920 6.0 9.9 0.6 0.6
Olym pic Entertainment Group 0.51  21.4% 469181 -2.6 -24.1 0.7 0.6
Silvano Fashion Group 0.42  13.5% 50041 -2.2 4.6 0.4 0.3
Tallink
Tallinna Kaubamaja
0.37
2.10
 15.6%
 13.5%
1669069
49348
53.6
16.1
-52.5
5.7
0.4
0.7
0.4
0.6
Estonia
Tallinna Vesi 8.70  -2.2% 10719 9.2 8.0 2.1 2.0
Viisnurk 0.69  -2.8% 3450 8.0 4.3 0.7 0.6
P/E P/BV
Olympic Entertainment Group posted Q1 09 results last Friday – another
Last Weekly Weekly
Latvia (in LVL) Close Change Volume Trail. 4Q 09F Last Q 09F sizable net loss though not as big as in Q4 08. Sales were €31m and
Grindeks 2.53  1.2% 54216 2.7 3.7 0.5 0.4 operating loss reached 6.2m. Share reacted positively as market focused on
Latvian Gas 4.01  0.2% 1102 7.9 0.5
the positives – company announcing it will save up to €30m in costs in 2009
Latvian Shipping Company 0.47  6.8% 9206 1.8 1.3 0.2 0.2
Latvijas Balzam s 0.91  -2.2% 725 3.1 0.2 (still looking at negative EPS for 2009 but 2010 should be in black). This
Liepajas Metalurgs 0.76  -3.8% 9594 0.7 0.2 was welcome news but as the case with other discretionary stocks the
Olainfarm 0.37  -5.1% 15830 -4.6 14.9 0.3 0.3
assumption must be that we have seen the bottom (Nov-Jan). This is too
SAF Tehnika 0.37  -2.6% 12252 -1.2 0.6 0.1 0.1
Valm iera Fibre Glas s 0.35  2.9% 20219 0.6 0.3
early to say in our view, and we expect the gaming markets in Latvia and
Ventspils Nafta 0.73  -2.7% 22842 2.1 0.2 Lithuania to contract further this year. Estonian gaming market took a sharp
Last Weekly Weekly
P/E P/BV adjustment (50% + down YoY) and we anticipate it will stay at that level till
Lithuania (in LTL) Close Change Volume Trail. 4Q 09F Last Q 09F
the end of they year and recover will be slow and number of casinos will
Apranga 1.64  8.6% 313654 4.3 10.1 0.6 0.6
City Service 3.20  2.6% 3980 6.0 3.8 1.0 0.8
decline to around 20 by year end with 20-25 slots per casino. The company
Grigiskes 0.38  5.6% 19900 -5.3 0.4 has traditionally outperformed the market and we believe this will be the
Invalda 1.32  -21.4% 444669 -0.7 0.3 case once again. Once the situation improves OEG should increase its
Klaipedos Nafta 0.89 0.0% 369772 10.6 0.7
market share in the Baltics. The balancing out of costs with new reduced
Lietuvos Dujos 1.07  -7.0% 58650 7.8 8.0 0.3 0.3
Lietuvos Energija 1.56  -1.9% 10772 25.4 0.4
revenue level will take up to a year and 2H 2010 is when we should see
Lietuvos Juru Laivininkyste 0.39 0.0% 182566 -4.0 0.3 return to normal profitability assuming no further reductions in salaries and
Lifosa 20.76  -2.1% 4075 1.8 0.5 rent costs are made. The company can probably further reduce its tax
Panevezio Statybos Trestas 1.53  2.0% 93151 0.7 0.2
expenses by lowering number of slots per casino outside of Baltics but at
Pieno Zvaigzdes 2.26  7.6% 3177 -28.3 4.1 0.9 0.7
Rokishkio Suris 1.70  -7.1% 104419 -3.9 0.4
this point we see little indications of that. Poland has become OEG’s biggest
RST 1.23  -0.8% 26475 -7.4 0.3 market and in future it is our opinion that along with Slovakia it will become
Sanitas 6.55  -3.0% 15585 -97.3 0.7 its main expansion area. TP €1.31 is under review as we making
Siauliu Bankas 0.71  -2.7% 103559 2.9 0.4
adjustments to revenues and costs taking into account the cost cutting
Snaige 0.34  47.8% 660023 -0.4 0.1
Snoras 0.53 0.0% 315850 0.7 0.2
measures, but keep target price at high risk BUY until next update is
TEO LT 1.30  1.6% 4713529 6.4 6.6 0.9 1.0 published.
Ukio Bankas 0.67  1.5% 366772 0.8 0.3
Source: Reuters, Swedbank

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Equity Research – Swedbank Markets Page 1 of 6

 Equity Weekly – 11 May 2009

Baltika published its sales figures on last Monday. Total sales declined 21% YoY and
amounted to €4.9m in April. The highest drop in turnover was recorded in wholesales which
fell 70% YoY to €0.23m. The retail sales amounted to €4.6m in April 2009, down from
€5.4m in April 2008.
Arco Vara informed the shareholders that the Tallinn Administrative Court annulled the
decision of Tallinn City Council with what detailed plan of Narva street 67 in Tallinn, Estonia
(project Tivoli) was established. A private person living in a flat nearby the Tivoli project has
contested the resolution, arguing that 780 parking lots in the approved detailed plan is not
in accordance with Tallinn Parking Development Plan for years 2006-2014, according to
the number of parking lots in Tivoli project should be 907. In addition, the complainant has
estimated, that administrative act, which determined the detailed plan, has lack of
motivation over matters of facts why changes in master plan has been needed and why the
need of environmental impact assessment has not been considered. Arco Vara is involved
in the process as a third person. Arco Vara considers to be reasonable to file an appeal.
Harju Elekter (HAE) published its Q1 2009 results last week. HAE’s sales in the
manufacturing segment were €10.4m, down 7.8% YoY. Sales in the real estate segment
grew 6.8% YoY to €0.6m in Q1 2009. In total, HAE’s turnover for the first three months
reached €11.6m, down from €13.0m in the same period a year ago. The net profit
amounted to €0.17m in Q1 which were below our estimates. We downgraded our TP to
€2.01 but reiterated BUY recommendation.
On Friday after market closed Ekspress Grupp published its Q1 2009 results. The total
revenue for the Group declined by 17.8% YoY amounting to €16.9m in Q1 2009. The net
loss reached €1.1m in the reported period. We will publish the quick comment on results
later today.
Tallink posted passenger and cargo volumes for April 2009. Total passenger volume
increased by 25.3% YoY. Strong growth was seen on key routes between Finland-Sweden
and Finland-Estonia. Cargo units were down 33% YoY as a result of significant drop in both
exports and imports volumes. Company has been able to attract more passengers with
cars though, somewhat off-setting the drop in cargo segment.

Latvia
Grindeks - reported 1Q 2009 results were broadly in line with our expectations. Sales were
LVL14.1m (-16.7% YoY), EBITDA was LVL2.3m (-55.2% YoY) and net profit was LVL1.2m
(-64.7% YoY). This was an anticipated drop as the company had significant one-off sales of
high-margin products in 1Q 2008, due to start of cooperation with Pharmstandart on
exclusive promotion and distribution of Mildronate in Russia and necessary stock was
purchased. 2Q 2009 results will tell if there will be a material effect from the production
error by Soteks in Russia.

Lithuania
The consolidated non-audited net profit of Ukio Bankas’ group in 1Q 2009 amounts to LTL
5.5m (€1.6m), or 70.11% lower than a year ago. The bank recorded unconsolidated non-
audited net profit of LTL 4m (€1.2m), down by 75.16% year-on-year.
On 8 May 2009 Ukio Bankas Statute with increased authorized share capital has been
registered with the Register of legal entities. After increase the Bank's authorized share
capital amounts to LTL 245 824 000 (€71.2m). The shares of the new LTL 49 116 000
issue will be transferred to the securities accounts of shareholders of Ukio bankas in
proportion to the nominal value of shares held by proprietary right at the end of the rights
accounting day (i.e. 10 April 2009) of the general meeting of shareholders, held on 27
March.
According to preliminary data, in 1Q 2009 DnB NORD Bankas earned net income of
104.4m (€30.2m), i.e. up by 9.3 % year-on-year, and operating expenses fell 6.2% year-on-
year to LTL 42.6m (€12.3m). The cost income ratio improved further to 39.4% in the 1Q
2009 compared to 47.4 % in the same period a year ago. In 1Q 2009, DnB NORD Bankas
earned a pre-tax operating profit before provisions of LTL 57.7m (€16.7m), a rise of 23.03%
YoY. The bank made LTL 106m (€30.7m) in provisions. As a result the bank recorded LTL
48.3m (€14m) loss, in comparison to net profit of LTL 37.6m (€10.9m) a year ago.

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Equity Research – Swedbank Markets Page 2 of 6

 Equity Weekly – 11 May 2009

In April, Klaipedos Nafta transshipped 438 thousands tons of oil products, 40.67% less
than a year ago. Preliminary earnings decreased by 35.24% year-on-year to LTL 6.8m
(€2m). The transshipment results for the 4 months of 2009 dropped by 18.64% YoY and
amounts to 2.39m tons of oil products. Preliminary earnings were LTL 36.1m (€10.4m), a
decrease of 15.26% YoY.
Starting the 4 May Snaige is back to the normal 5 days a week work schedule.
In April 2009, the consolidated non-audited sales of dairy manufacturer Rokiskio Suris
made LTL 52.141m (€15.1m), i.e. up by 5.16 % YoY. The sales increased due to the EU
intervention purchase. During 4 months in 2009, the preliminary consolidated non-audited
sales made LTL 178.36m (€51.66m), i.e. down by 5.34 % compared to the same period in
2008.
During the 1Q 2009 Zemaitijos Pienas non-audited consolidated sales revenue amounted
to LTL 90.25m (€26.14m) and this is 20.42 % less than a year ago. Non-audited
consolidated loss reached LTL 3.6m (€1.04m), which is a 33.34% better result than a year
ago.
In April 2009, the retail turnover (including VAT) of apparel retailer Apranga made LTL
30.9m (€8.9m), and decreased by 20.9% YoY: a decline of 22% YoY in Lithuania, a drop of
22.8% in Latvia, and 6.6% in Estonia. During 4 months of 2009 the retail turnover (including
VAT) has made LTL 124.8m (€36.1m), and has lowered by 22.3% year-on-year. Currently
Apranga operates 118 stores in the Baltic States: 78 in Lithuania, 31 in Latvia, and 9 in
Estonia.

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Equity Research – Swedbank Markets Page 3 of 6

 Equity Weekly – 11 May 2009

Investor Calendar:
Estonia
12.05.2009 NRM - Annual General Meeting
14.05.2009 NCN - Annual General Meeting
11.-15.05.2009 NCN - Interim Report Q1 2009

Latvia
11.-15.05.2009 ELG - 3M non-audited financial report

Lithuania
12.05.2009 LNS1L - Repeated Annual General Meeting
15.05.2009 PTR1L - Repeated Annual General Meeting
15.05.2009 LFO1L - sales revenue in April 2009
15.05.2009 VBL1L - sales revenue in 3M 2009; consolidated financial statement for Q1 2009

Source: NASDAQ OMX

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Equity Research – Swedbank Markets Page 4 of 6

 Equity Weekly – 11 May 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
Recommendations by the 11 May 2009 41%
Under
No of shares Part of total Rev iew
Buy 9 41% 59%
Under Review 13 59%

Equity Research – Swedbank Markets Page 5 of 6


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Equity Weekly – 11 May 2009
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