Equity Weekly

Equity Research - Monday, December 14, 2009

Index value Weekly Change,% Weekly Turnover

Baltic Indices
400 Estonia 413.5 -0.44% €2,4m

375 The OMXT index ended the week at 413.5 points, -0.44 W-o-W. The market
remained quiet and as a result of this the weekly turnover reached €2.4m only.
350

325
Latvia 283.4 -2.31% €0,2m

300 Rather slow trading continued in Riga. Strong selling pressure was seen in Riga
Shipyard around LVL 0.20 level. Buying interest by retail buyers pushed Saf
275
tehnika up by almost 7% to LVL 0.79.
11-Sep 25-Sep 9-Oct 23-Oct 6-Nov 20-Nov 4-Dec
Baltic Benchmark OMX Tallinn*
OMX Riga* OMX Vilnius* Lithuania 264.8 -1.00% €1,7m
* Relativ e to Baltic Benchmark Source: Reuters, Swedbank

As in other Baltic markets, a decline in Lithuanian stock exchange was

P/E P/BV
Estonia (in €)
Last
Close
Weekly Weekly
Change Volume Trail. 4Q 09F Last Q 09F
recognized as well. The OMXV ended the week at 264.8 points which is -1% W-
Arco Vara 0.17  -5.6% 507057 -0.2 8.1 0.5 0.3
o-W. Activity remained very small also, amounting to €1.7m.
Baltika 0.67  -2.9% 67139 -1.6 -1.8 1.0 1.0
Eesti Telekom 5.95  1.7% 4155 10.1 16.8 4.0 4.9
Ekspress Grupp 1.09  3.8% 9246 -4.8 -4.6 0.6 0.7
Harju Elekter 2.19  -0.5% 6570 34.6 27.9 1.3 1.4
Järvevana 0.39  11.4% 4200
Merko Ehitus
Nordecon International
5.06
1.66
 -2.7%
 -2.9%
9350
77485
19.6
89.2
-72.4
-31.3
0.7
1.0
0.7
1.1
Estonia
Norma 3.90 0.0% 10554 37.9 -38.4 0.9 0.9
Olympic Entertainment Group 0.74  1.4% 959372 -2.2 -4.4 1.3 1.3 Arco Vara announced that they sold its shares of Arco Ukraina Valduse OÜ
Silvano Fashion Group 0.80  -2.4% 303532 -27.3 -21.1 1.0 0.8
Tallink 0.38 0.0% 2100562 -31.3 7.5 0.4 0.4
(86.66% subsidiary of Arco Vara) last week. The value of the transaction
Tallinna Kaubamaja 3.83  -2.8% 45805 -26.7 -16.2 1.4 1.5 was €250, and with transaction Arco Vara AS gained extraordinary profit of
Tallinna Vesi 10.26  1.6% 4696 10.5 10.0 2.5 2.3 €5113, which was a result of selling out from the Group company with
Viisnurk 0.75  2.7% 30167 223.7 4.7 0.7 0.7
negative equity. The purpose of the transaction was to exit from activities
P/E P/BV
Latvia (in LVL)
Last
Close
Weekly Weekly
Change Volume Trail. 4Q 09F Last Q 09F
which produced loss to the Group and which sustaining needed financial
Grindeks 3.60  -7.5% 3067 3.3 5.2 0.5 0.6 support. That's why Arco Vara does not consider its attendance in Ukraine
Latvian Gas 4.11  -10.7% 1340 8.1 0.6 as perspective. Arco Ukraina Valduste OÜ was holding company for Arco
Latvian Shipping Company 0.41 0.0% 47378 1.5 1.2 0.2 0.1
Latvijas Balzams 2.08  5.1% 683 7.0 0.5
Vara brokerage bureau operating in Kiev, Ukraine.
Liepajas Metalurgs 1.14  1.8% 416 1.0 0.2
Olainfarm 0.97  -2.0% 30727 98.6 9.0 0.9 0.8
SAF Tehnika 0.79  6.8% 39239 -2.7 1.2 0.3 0.2
Valmiera Fibre Glass
Ventspils Nafta
0.43
0.93
 2.4%
 1.1%
1665
25357
0.8
2.7
0.4
0.3
Latvia
Last Weekly Weekly P/E P/BV
Lithuania (in LT L) Close Change Volume Trail. 4Q 09F Last Q 09F No Corporate News.
Apranga 2.30  -6.5% 208231 17.7 -3.5 1.0 0.9
City Service 7.68  -0.6% 18616 13.4 9.1 2.3 1.9
Grigiskes 0.96  -1.0% 26754 -12.6 0.9

Lithuania
Invalda 1.87  -5.1% 70765 -0.7 0.5
Klaipedos Nafta 0.97  -1.0% 52823 12.3 0.8
Lietuvos Dujos 2.10  -2.8% 35737 24.7 15.7 0.5 0.5
Lietuvos Energija 2.58  -7.9% 9031 -49.3 0.7
Lietuvos Juru Laivininkyste 0.44  -2.2% 58520 -2.2 0.4 In November Rokiskio suris delivered sales of LTL 39.77m (EUR 11.5m),
Lifosa 28.50  1.1% 5772 3.8 0.7 which is 23.9% less than for the same period last year. The preliminary
Panevezio Statybos Trestas 3.55  0.6% 59973 2.0 0.5
consolidated non-audited sales for January-November were LTL 517.5m
Pieno Zvaigzdes 2.86  -1.4% 4624 18.4 5.2 1.1 0.9
Rokishkio Suris 3.16  -2.2% 5975 -14.0 0.8
(EUR 149.9m), down by 16.9% yoy.
RST 1.95  -1.0% 35332 -11.0 0.4
Sanitas 9.75  -1.5% 13432 -11.9 1.2
Vilkyskiu pienine November sales amounted to LTL 14.2m (EUR 4.1m), up
Siauliu Bankas 1.02 0.0% 233221 4.1 0.6 by 19.1% yoy. From the beginning of the year to November the company
Snaige 0.59 0.0% 280082 -0.5 0.3 sold production for LTL 145.4m (EUR 42.1m), up by 4% yoy.
Snoras 0.91  -6.2% 702271 1.3 0.4
TEO LT 1.89  3.3% 436752 8.9 8.8 1.5 1.4 In 2010 Pieno Zvaigzdes expects sales of approx. LTL 640m (EUR
Ukio Bankas 1.02  -3.8% 1632438 1.2 0.4
185.4m). The largest growth is expected in export markets generating over
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 – 14 December 2009

half of total proceeds. The management expects Operating Cash Flows to reduce financial
debt further by approx. LTL 40m (EUR 11.6m). By year end 2010 the management
forecasts 11% EBITDA profitability and approx. 3% net profitability, CAPEX of LTL 20m
(EUR 5.8m).

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

Equity Research – Swedbank Markets Page 2 of 5

 Equity Weekly – 14 December 2009

Investor Calendar:
Date Description
Estonia
No Corporate News

Latvia
17.12.2009 SAF1R - Dividend X-date
17.12.2009 LAP1R - Dividend X-date
18.12.2009 PRX - Extraordinary General Meeting
21.12.2009 SAF1R - Dividend record date
21.12.2009 LAP1R - Dividend record date

Lithuania
15.12.2009 LFO1L - Sales Revenue in November 2009
17.12.2009 UTR1L - Extraordinary General Meeting
18.12.2009 ZMP1L - Extraordinary General Meeting

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 – 14 December 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
Marko Daljajev Estonia
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
Donatas Užkurėlis Lithuania Lauri Lind Head of Baltic Equity Capital Markets
donatas.uzkurelis@swedbank.lt +370 5 268 4395 lauri.lind@swedbank.ee +372 6 131 355
Mihkel Torim Baltic Equity Capital Markets
mihkel.torim@swedbank.ee +372 6 131 564

Swedbank Group Homepage: www.swedbank.com. For Research products on Bloomberg please type: HBME <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.

Recommendations by the 14 dets 2009

No of shares Part of total
Buy 10 ██████████ 45%
Accumulate 3 ███ 14%
Hold 1 █ 5%
Reduce 2 ██ 9%
Under Review 6 ██████ 27%

Equity Research – Swedbank Markets Page 4 of 5

 Equity Weekly – 14 December 2009

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