Hate to say I told you so

But I told you so. It just took way longer than I thought it would.


Should you buy now? No. The resistance levels are at 4000 and 4500. With the price being at just around 4000, it will most likely stagnate or fall, probably towards 3500 or 3000. Long term, it will likely go to 9000 after this one, so if you hadn’t bought your stash yet, keep a cool head and you’ll likely still have an opportunity to do so.

The reason for that is that if we look at the fundamentals, it’s still a good buy in the long term, nothing really changed in the last year or so. That’s why I haven’t been writing in a last year or so. Some people feel the need to reiterate their opinions over and over again. I find that to be somewhat over the top, especially since it doesn’t make me any direct profit and I’m not that interested in self-marketing.

Annual and Quarterly Reports

So I haven’t written anything in a while, because really, there wasn’t anything to write about. I still don’t have much remarkable to say that I didn’t say already, but I’ll go over the freshly released results for the companies that I find interesting or that I’ve written about before in order to compare how my expectations aligned with reality. So let’s go.

ZVZD – A barely negative result in a quarter that is usually negative. Nothing great, nothing horrible, still boring and cheap.

KOES – Mild downsizing, but improved profitability. My guess is that the downsizing is a fairly temporary transition from CEFTA to EU markets. I believe the overall sales volume will increase in the future as new deals are made with EU grocery chains. Fundamentals are simply amazing – P/E 7, P/B and P/S below 1, debt 75%, EV/EBITDA 4.5…

SNBA – Still the cheapest bank on the Croatian market, but profitability is still low. At least it’s not negative, so I still consider it to be a good buy.

VPIK – A bit of disappointment here, getting to profitability may take longer than expected.

PTKM – A surprisingly good report (considering that mildly negative earnings are really good when measured by the standards of this company). What stands out is that their core business could actually be profitable if they weren’t stuck under a big pile of debt. Perhaps through some restructuring they could actually turn profitable, but that profitability will likely stay low for years to come considering the fact that their debt is huge.

RIVP – It looks as this year they may earn enough money to actually be forced to share some with their shareholders. I wouldn’t count on it, however, considering their good skills in hiding actual profits.

SAPN – C/P Koestlin, except with marginally worse stats, primarily in the form of higher debt.

BLKL – One of the best buys on the market IMHO. The stats are great. No debt whatsoever, good profitability, dirt cheap..what more to ask for?

RIZO – Starting to show some profitability, but not nearly as cheap as last time I mentioned them.

(The rest to come)

End of year results

By now most companies on the Zagreb Stock Exchange have published their yearly results for 2014, and here I will give my opinion on the results of the companies that I have or that I find interesting. So here we go, in no particular order. This list will likely be updated as new ones come about.

1. ZVZD – A pretty good report that reduced this stock’s P/E ratio to about 13. Considering the fact that the stock is still selling for 0.3BV and that cash itself makes up around 50% of the market value, this is as strong buy as any. There is a downside, however, and it’s related to the fact that it’s a part of the larger Agrokor concern. I believe that’s what’s behind their pretty wild cash flows, since Agrokor needed a lot of money to buy the Slovenian grocery chain Mercator. Still, the stock is pretty much as solid as ever, and not much is different from 2007 when it was going for approximately 8 times the current price.

2. KOES – It seems that nobody really cares about this stock aside from me and the current owners, but it is basically the same story as with ZVZD. P/E below 10, P/B and P/S around 0.3 make this company seriously undervalued. As it has happened with another company, ZVCV, KOES also made a deal with TESCO regarding the placement of their products on foreign grocery store shelves. Unlike ZVCV, however, this stock isn’t as loudly represented in the blogosphere, and as a consequence it seems that nobody even noticed that fact. Still, one day or another someone will notice, and the company price is unlikely to linger this low when that happens. Although the company is withdrawing from the CEFTA countries because of its EU membership, the same event caused its sales to grow significantly in many EU markets such as Poland. The net result is still somewhat lower sales, but the profitability is finally up, and it is likely to expect that sales will ultimately surpass those of the pre-EU era.

3. SNBA – the end result is more or less neutral. Although there is some marginal profitability at the end of the year, it pretty much amounts to 0. What is important, however, and what has nothing to do with the annual reports, is that the company won a hugely important lawsuit yesterday, in which another bank from Serbia, Jugobanka, demanded a hefty amount of money from SNBA. With that lawsuit out of the way, SNBA seems to be a really underappreciated stock with cash/share ratio of 75% and P/B value of less than 0.2. Their real estate alone is likely to be valued higher than the whole company.

4. VPIK – Still a cheap company, but with bad results. It is still in the process of restructuring though, and if history is any guide, Mr Todoric who now owns the company (as well as ZVZD) will most likely bring it up to par with the rest of his Agrokor portfolio.

5. DDJH – Horrible results, as I have expected. Half the money gained through recapitalization 3 months ago is already lost, and to make the matters worse, the state is now the majority owner. If this company loses the APC job, it will go bankrupt within days. If it wins, it will linger on with zero profitability for a year or so and go bankrupt then. What’s even more concerning is the fact that all avalilable cash has been transfered from DDJH (holding) to DDJ SV (special vehicles). I’m not quite sure what to make of this, but it may be that the government is trying to save what’s worth (DDJ SV) by sacking DDJH. In other words, DDJH will go bankrupt, and the creditors will get their appropriate shares in the DDJ SV. DDJH shareholders will lose all their money, but the banks will be partially compensated by gaining ownership of the new company. It will also be a way to privatize it, since no one in his right mind would give any money to buy the current DDJH stock. A bankrupcy, on the other hand, will force the banks to become owners. Keep in mind that this is just one of the many possible scenarios, but it’s one that would explain many things.

6. PTKM – A bad stock with bad results. Not much else to say here. I warned of this stock when it was over 300, and when many bloggers who are way more popular than me implied that it could go to 900. Well, it didn’t go to 900. It didn’t stay at 300. It’s 15 or something like that. Close enough to 0 that I don’t really care, it’s as good as bankrupt.

7. RIVP – Hey guess what? Count Eltz doesn’t really want to share his profits with anyone. So even though the hotel business is hugely profitable for him, it’s not really that profitable for the other shareholders. Whichever way he thought of to suck the money out of the company for himself is working, and I’m doubtful the company will ever post huge profitability, meaning that the shareholders are unlikely to ever get a significant dividend. I may be wrong on this one, but that’s the way I see it.

8. SAPN – The story here is similar to KOES (it’s also owned by the same Mepas group), but the debt level is higher at 220%. Still, it’s an undervalued company with decent results.

9. BLKL – I just recently found about this stock. Although I read about it on the same blog that used to root for DDJH and PTKM, the stock seems pretty cheap and profitable by all means. It’s basically in the same category as KOES.

10. RIZO – I don’t really follow the stock that much, except for one time I wrote about it when the price skyrocketed because of media attention. However, it seems to be a fundamentally good stock. One thing to worry about, however, is the fact that there’s a big lawsuit against the company organized by former workers for allegedly unjust layoffs. The amount of money they ask is quite large, so if that lawsuit succeeds, the company might end up in big trouble.

11. KOKA – Just copy and paste whatever I said for KOES here. Fundamentally, these two companies are almost exact equals.


A picture says a thousand words


There are several nice things to see here, but I’ll start with the most important one – the two year long downward trendline seems to have been breached! This basically means the stock is likely to form a nice W (blue), with a first price target somewhere in the 3800-4000kn range. It’s the point where a second trendline meets with somewhat dense overhead resistance.

Would I sell at 4000? Looking at a short term, yes. The stock is likely to stagnate for a while or drop to 3500 after the first target is reached. But if we’re talking about long term, then the answer is no. Aside from the excellent fundamentals I’ve already been talking about, there is a classic 5-3 growth pattern, which is most likely to continue into wave 3, reaching the next resistance level of 5500-6000kn. Even when that happens, the stock will likely still not be overpriced, as a fair price for this stock based on the book value and cash flow is in my opinion somewhere in the 8000-12000kn range. This stock has already been at around 20k with pretty much the same fundamentals, so I wouldn’t exclude another bubble in the next several years or so, but personally I would consider it to be a somewhat irrational investment above 12000, unless technicals would strongly suggest otherwise.

Also, in retrospect, we can see an example of the head & shoulders pattern, with a peak in the first half of 2013. It’s basically composed of the first two waves, and it’s a really nice real world example of the pattern. This pattern has pretty much made its target at around 2700, meaning it should no longer be considered relevant for the future price movement. However, I’ve mentioned it because it makes a nice example.


This is quite an interesting bit of news


Basically, the owner of ZVZD and VPIK is thinking about an IPO worth around 5 billion US$. I believe this may result in quite an interesting development in regard to market valuation of these (and some other) stocks, because we’ll see exactly how much they’re indirectly valued through their individual percentage of the company property. It could also mean increased interest from foreign investors, some of whom are likely to sniff around and investigate the details of what they’re thinking about buying. This just may be the trigger that’s needed to break through the upper resistance line we’ve been following for the last couple of years on both of these stocks.

All in all, this is pretty big, and might actually change the whole paradigm of ZSE. It’s exactly what is needed to boost this market out of its current lethargy – big foreign investors. I’m actually pretty surprised that this was not a hot topic on local news. Oh well, more time to fatten up on these stocks before things start unfolding.




Although I’ve already said pretty much everything there is to say about this stock, both fundamentally and technically, I believe we are currently on the verge of interesting development. The stock has been sliding down the trendline for a while, but it really looks as the resistance has in fact been breached. We’re now at the support level, and although things can always go both ways, the strong resistance suggests there is a greater likelihood of this actually being a final turning point.


Rising star

Today has been one of the more interesting days on the ZSE. It seems that ZVZD has finally broken through the low liquidity that has been holding it down for the last few years, as it was one of the most traded stocks on the exchange. Tourism stocks, on the other hand, don’t seem to be doing so well. I have already gone against the current and warned about KORF/RIVP becoming somewhat overrated, and it seems the market has started to agree with me. RIVP is down more than 20% since its merger with KORF, which is quite a significant drop considering such a small time frame. At this rate, it may actually become a good buying opportunity in a week or two 🙂

Anyway, here’s the daily chart that illustrates exactly what has been going on in the last few days:


As my writings become more and more popular, it is difficult to say whether they have influenced this ZVZD market shift or not. They might have, but I don’t consider it to be a relevant question anyway – it’s like asking which particular snowflake caused the avalanche. Yes, my snowflake was likely somewhat bigger than the others, and there weren’t many to begin with, so it just as well might have been the one. But I believe the avalanche was bound to happen anyway. I don’t believe I had any effect on KORF/RIVP, however, since they were high volume stocks whose movements didn’t seem to correlate with my prior writing.