Equity Weekly

Equity Research - Monday, September 21, 2009

Index value Weekly Change,% Weekly Turnover

Baltic Indices
390 Estonia 437.5 1.43% €8,2m

355 Last week retail was mostly on the market, pushing shares up. The strongest
improvement in share price was recorded on Arco Vara, which improved by 25%
w-o-w. Overall, the total turnover of the market amounted to €8.2m which is
320
+1.4% w-o-w.

285
Latvia 333.4 3.68% €0,4m
250
Positive mood continued in Riga, most of shares experienced significant gains on
215 small volumes. Pharmaceutical companies Grindeks and Olainfarm were the
18-Jun 2-Jul 16-Jul 30-Jul 13-Aug 27-Aug 10-Sep
most traded stocks last week where Grindeks slightly increased by 1.72% to
LVL4.73 and Olainfarm gained 6.19% to LVL1.03. Thinly traded Liepajas
Baltic Benchmark OMX Tallinn*
OMX Riga* OMX Vilnius* Metalurgs which share price almost doubled during previous two months added
* Relativ e to Baltic Benchmark Source: Reuters, Swedbank almost 25% to LVL1.57 last week however traded turnover remained very small.

Last Weekly Weekly P/E P/BV Lithuania 313.2 2.26% €9,5m

Estonia (in €) Close Change Volume Trail. 4Q 09F Last Q 09F
Arco Vara 0.30  25.0% 2325140 -0.4 -3.8 0.7 0.8
Baltika 0.98  1.0% 342378 -2.3 -3.6 1.5 1.3
Eesti Telekom 6.00  -0.7% 172210 10.2 12.7 4.0 3.4
Last week the OMXV improved by 2.3% w-o-w to 313.2 points. The total turnover
Ekspress Grupp 1.30  -1.5% 117145 108.9 -24.6 0.7 0.7
of the market was €9.5m. City Service performed the best on OMXV last week,
Harju Elekter 2.68  -1.5% 34264 33.2 34.1 1.8 1.8 the share price increased almost 32% w-o-w to LTL 10.55.
Järvevana 0.35  16.7% 90921
Merko Ehitus 5.10  2.8% 16764 17.8 -39.7 0.7 0.7
Nordecon International 1.53  3.4% 265410 18.3 -28.9 1.0 1.0
Norma 3.75
Olympic Entertainment Group 0.83
0.0%
 2.5%
19359
1704225
12.6
-4.3
-36.9
-39.3
0.9
1.1
0.9
0.9
Estonia
Silvano Fashion Group 0.71  -2.7% 50355 -2.6 -52.4 0.8 0.7
Tallink
Tallinna Kaubamaja
0.40
5.75
0.0%
 8.5%
5604404
259169
-25.9
-68.7
-12.0
93.6
0.4
2.1
0.4
2.0
Satmatic Oy, the 100% Finnish subsidiary of Harju Elekter, purchased the
Tallinna Vesi 10.25  1.5% 29548 10.9 11.0 2.8 2.4 rights to manufacture and sell vehicle pre-heating panels for car parks,
Viisnurk 0.76  2.7% 45416 226.7 4.8 0.8 0.7 which belonged to Siemens Oy. With the transaction, Satmatic acquired the
Last Weekly Weekly P/E P/BV
technology for the manufacture of vehicle heating panels for car parks,
Latvia (in LVL) Close Change Volume Trail. 4Q 09F Last Q 09F
Grindeks 4.73  1.7% 18283 5.0 6.9 1.0 0.8
including production equipment and the required know-how. Thus far,
Latvian Gas 4.75 0.0% 3971 9.3 0.6 Satmatic had been manufacturing the heating panels as a subcontractor for
Latvian Shipping Company 0.61  -1.6% 33112 2.3 1.7 0.3 0.2 Siemens. Vehicle heating panels for car parks are used mainly in Finland for
Latvijas Balzams 2.98  21.6% 2835 10.0 0.7
Liepajas Metalurgs 1.57  24.6% 2765 1.4 0.3
the pre- heating of cars when starting the engine, where the estimated
Olainfarm 1.03  6.2% 51207 -12.8 41.4 0.9 0.9 annual market volume is about 40 thousand products. There is a potential
SAF Tehnika 0.68  6.3% 23344 -2.3 1.0 0.2 0.2 market for said products in other Nordic countries and in Russia as well.
Valmiera Fibre Glass 0.45  12.5% 50510 0.8 0.4
Ventspils Nafta 1.13

Last
 4.6% 5352

Weekly Weekly
3.3
P/E
0.4
P/BV Latvia
Lithuania (in LT L) Close Change Volume Trail. 4Q 09F Last Q 09F
Apranga 3.50  1.4% 207419 27.0 -5.3 1.4 1.3
City Service 10.55  31.9% 130225 18.4 12.5 3.2 2.5 No Corporate News.
Grigiskes 0.94  17.5% 300183 -12.4 0.9
Invalda
Klaipedos Nafta
2.82
1.05
 11.5%
 -0.9%
355198
97586
-1.0
13.3
0.8
0.8
Lithuania
Lietuvos Dujos 2.33  1.7% 200813 27.4 17.4 0.6 0.6
Lietuvos Energija 2.96  0.3% 83198 -56.5 0.8
Klaipėdos jūrų krovinių kompanija will be delisted from the VSE starting
Lietuvos Juru Laivininkyste 0.47  -2.1% 84848 -2.3 0.4
Lifosa 31.71  -5.3% 35879 4.2 0.8
from December 31, 2009.
Panevezio Statybos Trestas 4.45  8.3% 335409 2.5 0.6
Pieno Zvaigzdes 3.54  10.6% 42091 22.8 6.4 1.3 1.2
From September 17, 2009, a voluntary tender offer to buy TEO LT, AB is
Rokishkio Suris 3.75  17.9% 37782 -16.6 0.9 launched. The closing date for execution of the tender offer is October 9,
RST 2.58 0.0% 109715 -14.6 0.5 2009. The price per share is LTL 1.83. The maximum number of shares to
Sanitas 10.80 0.0% 60380 -13.2 1.4
buy is 281 470 107, and the minimum number of shares to buy is 1.
Siauliu Bankas 1.38  -0.7% 814006 5.6 0.9
Snaige 0.89  17.1% 2133753 -0.8 0.5
Lifosa announced sales of LTL 39.8m (EUR 11.5m) for August or 5.6 times
Snoras 1.45  -2.0% 4107667 2.0 0.6
TEO LT 1.86  -1.1% 2391059 9.1 9.8 1.3 1.4
less than for the same period last year. Sales income during January-
Ukio Bankas 1.45  -2.0% 6522028 1.6 0.6
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 – 21 September 2009

August 2009 amounted to LTL 574.2m (EUR 166.3m) down 2.3 times less than for the
same period last year.
City Service will summon an extraordinary shareholders meeting on the 5th of October
2009. One of the questions in the agenda is to increase the authorized capital from the
shareholders’ additional contributions.

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

Equity Research – Swedbank Markets Page 2 of 5

 Equity Weekly – 21 September 2009

Investor Calendar:
Date Description
Estonia
No Corporate News

Latvia
25.09.2009 OLF1R - Extraordinary General Meeting
28.09.2009 FRM1R - Extraordinary General Meeting
28.09.2009 NLB1R - Extraordinary General Meeting

Lithuania
No Corporate News.

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 – 21 September 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
18%
Recommendations by the 21 sept 2009 Accumula
te
No of shares Part of Total 5%
Buy 4 18% Under
Reduce
Accumulate 1 5% Review
9%
54%
Reduce 2 9%
Sell 3 14%
Sell
Under Review 12 55% 14%

Equity Research – Swedbank Markets Page 4 of 5

 Equity Weekly – 21 September 2009

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