This week’s highlights for investors on the Bulgarian stock market include:
Pharma wholesaler Sopharma Trading reported 10% y/y sales growth
Pharma wholesaler Sopharma Trading (SO5 BU) reported 10% y/y sales growth, pre-tax profit dropped 3.3% y/y in Aug’19, according to regular monthly newsletter published by the Company. In Aug’19, the latter generated BGN 65.8m in sales (up 10% y/y), boosting the YTD top line to BGN 509.6m (up 9% y/y). Pre-tax profit during the eight month declined 3.3% y/y to BGN 1.5m, yet profitability since the start of the year improved as Jan-Aug’19 pre-tax profit reached BGN 14.2m (up 17% y/y).
Growth of business: Sirma Solutions with a new approx. BGN 7m contract
IT company Sirma Group Holding’s (SKK BU) subsidiary Sirma Solutions signed a BGN 6.6m contract with the National Health Insurance Fund, the Company announced in a filing. Sirma Solutions won a tender procedure for the provision of cloud services and related licenses to the National Health Insurance Fund for a term of 4 years. The amount of the contract is BGN 6.64 (VAT excl.)
Bulgaria to reopen once again recent 20-year bond issue
Bulgaria to reopen once again recent 20-year bond issue offering additional BGN 95m at 1.50%, the Bulgarian National Bank announced in a filing. BNB reopens the bond issue for the third time. The BGN 95m bond matures on 21st Jun’39 and has a coupon of 1.50%. The auction for it will be held on 7th Oct. It should be noted that in Jun’19, Bulgaria placed BGN 100.6m as part of the same issue at 1.60% yield. Additional BGN 200m were issued in Jul’19 at a lower yield of 1.52% and in Aug’19 it issued once more BGN 200m at 1.42%. Moreover, in Jun’19 Bulgaria placed a 10.5-year bond with a nominal value of BGN 200m (yielding 0.41%), which was later reopened to add another BGN 200m yielding 0.32%. Following the upcoming issue, Bulgaria will have increased its debt by BGN 1bn since the start of the year.
Bulgaria’s budget surplus shrinking
Bulgaria’s end-Aug’19 budget balance surplus shrank to BGN 1.11bn (1.0% of expected 2019 GDP*), Sep’19 expected to end with a surplus of BGN 1.27bn, according to data published by the Ministry of Finance. The surplus since the start of the year is more than twice lower compared to the surplus of BGN 2.39bn (2.3% of GDP) as at the end of Jun’18.
*According to forecast by the Ministry of Finance, GDP for 2019 is projected to reach BGN 116.4bn (EUR 59.5bn)
Business sentiment data
Overall local business sentiment stood flat y/y in Aug’19, according to latest national statistics. Industry sub-index dropped 2.1% m/m as industrial entrepreneurs anticipate drop in orders in the next three months. Shortage of labor and uncertain economic conditions remain the main obstacles for the sector. Construction sub-index, on the other hand, added 0.8 p.p. m/m in Aug’19, as sector entrepreneurs reported improvement in current construction activity.
Retail and services sub-indices increased by 1.8 p.p. and 1.7 p.p. m/m, respectively during the period. While retailers are positive about the market development in the next six months, entrepreneurs operating in the services industry are rather reserved about the future performance of the sector. Retail and service-related prices are to remain at current levels in the next three months.