intercapital research croatia i slovenia i romania i ... espresso... · unilever distribution...

Theme of the Day:

Overview of Atlantic Grupa’s Historical Trading MultiplesBond, Money and Currency Markets:

Romanian GDP Increased by 4.8% in the Ultimate Quarter of 2016Croatian Equity Market:

HT Lays off Another 100 Workers, PBZ Proposes Dividend of HRK 25.33 per ShareRegional Equity Market:

Earnings Season Kicks in RomaniaGlobal Equity Market:

U.S. Equities Post New Records Technical Perspective - Region:

HTRA ZA - Resistance @ 178,50Technical Perspective - Global:

DAX - Support @ 11430

IC Daily Highlights

•[CROATIA] HT plan to lay off another 100 workers•[CROATIA] PBZ Bank's AGM will take place on 27 March, Management proposes HRK 25.33 DPS•[CROATIA] Tehnika's preliminary 2016 results show sales down 28% (to HRK 454m), net profit HRK 0.9m (+91%)•[SLOVENIA] Luka Koper inaugurates new craine rails and two rail-mounted gantry cranes•[ROMANIA] Banca Transilvania's 2016 cons net profit down 48% to RON 1.3bn•[ROMANIA] Nuclearelectrica's 2016 non-cons net profit down 27% to RON 109m•[ROMANIA] Transelectrica's 2016 non-cons net profit down 21% to RON 286m•[ROMANIA] FP's 2016 net profit RON 447m (from a RON 565m loss)•[ROMANIA] BVB's 2016 profit up 19% YoY•[ROMANIA] Q4 GDP growth rate 4.7% YoY (flash estimate), FY2016 GDP up 4.8%•[SERBIA] Stock Exchange will be closed today and tomorrow•[BULGARIA] Q4 2016 unemployment rate was 6.7%•[BULGARIA] Q4 2016 GDP growth rate 3.4% YoY (flash estimate)•[BULGARIA] Q4 2016 avg. gross monthly wage rises 8.2% YoY

IC Daily Newsflash

InterCapital Contacts

Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures

IC MARKET ESPRESSOInterCapital Research

15 February 2017

Quote of the Day:„As a speculator you must embrace disorder and

chaos.”

Louis Bacon

Ivan DražetićMoney Market and Fixed Income, DealerPhone: + 385 (0)1 4825 852E-mail: [email protected]

Kristina PukšecHead of Fixed Income and Money MarketPhone: + 385 (0)1 4825 854E-mail: [email protected]

IC.traderInterCapital.hr1

Đivo PulitikaAnalystPhone: + 385 (0)1 4825 867E-mail: [email protected]

Croatia I Slovenia I Romania I Bulgaria I Serbia

Margareta MaresićJunior AnalystPhone: + 385 (0)1 4825 857E-mail: [email protected]

Renata ČempuhHead of Front OfficePhone: + 385 (0)1 4825 890E-mail: [email protected]

Danijel DelačHead of BrokeragePhone: + 385 (0)1 4825 894E-mail: [email protected]

Filip MajićBrokerPhone: + 385 (0)1 4825 896E-mail: [email protected]

Marin OnoratoMoney Market and Fixed Income, DealerPhone: + 385 (0)1 4343 180E-mail: [email protected]

Marcel DimačJunior AnalystPhone: + 385 (0)1 4825 858E-mail: [email protected]

Date Announcement

15-Feb-17 Fondul Proprietatea - FY 2016 (prelim.)

15-Feb-17 Banca Transilvania - FY 2016 (prelim.)

15-Feb-17 Transgaz - FY 2016 (prelim.)

15-Feb-17 Transelectrica - FY 2016 (prelim.)

15-Feb-17 Nuclearelectrica - FY 2016 (prelim.)

16-Feb-17 OMV Petrom - FY 2016 results (prelim.)

16-Feb-17 Romgaz - FY 2016 (prelim.)

20-Feb-17 Petrol - FY 2016 results

23-Feb-17 TLSG - FY 2016 (prelim.)

Upcoming Announcements

Company Investment Thesis

VALAMARRIVIERA

One of the largest hospitality groupsFavourable accommodation positioning

Strong growth potential

PETROLGROUP

Stable cash flowHigh level of debt

Strong retail player

ADRISGROUP

Strategic shiftStrong cash position

Growth potential in insurance

FONDULPROPR.

Managed by Franklin TempletonSignificant discount to NAV

Possible privatizations of portfolio companies

Top Regional Investment Stories

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16-Feb-16 16-May-16 16-Aug-16 16-Nov-16

CRO Index SBITOP Index BELEX15 Index

BET Index SOFIX Index

Source: Bloomberg

Regional indices TTM

http://ictrader.com.hr/

http://www.intercapital.hr/

Overview of Atlantic Grupa’s Historical Trading Multiples

Theme of the Day

IC MARKET ESPRESSO

Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 2 IC.traderInterCapital.hr

Key financials from 2009

EV/EBITDA, horizontal line represents the median value

P/E, horizontal line represents the median value

9%10%

10%

11% 12% 12%

10% 10%

4% 5%

1% 1%

4% 4% 4% 5%

0

1,000

2,000

3,000

4,000

5,000

6,000

2009 2010 2011 2012 2013 2014 2015 T12 2016

Mill

ion

sH

RK

Sales EBITDA margin Net margin

5

7

9

11

13

15

17

19

21

23

25

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Due to the loan for takeover of Droga Kolinska

0

10

20

30

40

50

60

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Sep-2010ATGR publishedit's takoing overKalnička Voda

Jun-2010takeover of Droga

Kolinska

Nov-2012debt refinancing

with EBRD, IFCand 4 comm. banks

Sep-2013investments in a

new factory inNova Gradiska Sep-2013

taking over the Unilever

distribution

Nov-2014taking over the

Foodland

May-2016reschedules loans

with EBRD, IFC until 2021

The median P/E in the period post 2010 stands at 14.6x, coupled with 8.2x EV/EBITDA. The shares are currently traded at 12.8x P/E and 9.17x EV/EBITDA based on trailing 12M financials.

In the light of the positive developments on the Croatian stock market lately, Atlantic Grupa’s share didn’t lag far behind. It showed a solidperformance, as from the beginning of the year it went up by 6.75% (based on yesterday’s closing price pf HRK 943.76), while CROBEX increased by8.72%. Therefore, for today we decided to see the historical development of Atlantic’s key financials and valuation. Note that we’ve used trailing(past) financials to calculate the multiples.

Atlantic Grupa went public in November 2007 with HRK 935 per share, which gave a P/E of 45.65 and an EV/EBITDA of 17.67. At yesterday’s closingprice P/E stood at 12.80 and an EV/EBITDA at 9.17. The graphs are showing that multiples were in a falling trend from 2011 onwards, and arecurrently somewhere near their median values for the post-2010 period.

In the course of the last six years Atlantic Grupa’s business was marked by several major things, among which we would emphasize the takeover ofDroga Kolinska and Kalnička Voda in 2010, signing a deal on debt refinancing with EBRD, IFC and 4 commercial banks, the beginning of investmentin a new factory in Nova Gradiška in September 2013, takeover of the Croatian and Slovenian distribution for Unilever at the end of 2013, takeoverof Foodland in 2014 and another debt refinancing deal with EBRD and IFC in 2016.



Romanian GDP Increased by 4.8% in the Ultimate Quarter of 2016

Bond, money and currency markets

IC MARKET ESPRESSO

InterCapital domestic bond quotes Bloomberg: INKA5 <GO>BBG User: INTERCAPITAL FI


Romanian Institute of Statistics published yesterday that GDP grew by 4.8% in 2016, thelargest GDP growth among EU28 countries. In Q4 2016 seasonally adjusted GDPincreased by 4.8% YOY, while it grew 1.3% compared to Q3. QOQ growth shows that Q3decelerated growth was a one-off event, implying economy has not been losing steam.

While personal consumption growth was massive in H1 2016, Q3 data showed modestdeceleration. At that moment someone could think that we’re watching at the very endof robust growth, yet recent data on retail sales and sentiment indicators (both of whichare leading indicators) showed there is more to story than that. Growth in last quarter of2016 was most likely driven by increase in personal consumption, reflecting robustdomestic demand at the turn of the year.

Last year’s GDP growth of 4.8% is the highest growth since 2008 and the growth is stillnot showing signs of slowing down. Nevertheless, there are several challengesRomanian economy has to meet by the turn of the current year. First, there weremassive protests accompanying a high degree of social unrest. Second, the budget lawstill has a lot a lot of moving parts (i. e. parts subject to sudden change). Namely, newbudget law expects deficit to reach 3.0% GDP, however recently promised wage andpension hikes have not yet been fully implemented into the budget. Also, governmentexpectations are built upon 5.2% YOY GDP growth, which could be quite a challengeconsidering higher energy prices, a non-existent slack on the labour market and previouswage hikes.

All in all, one has to admit that Romania saw the single largest GDP growth in EU28 lastyear. The deterioration of public finance is still something to worry about since publicexpenditures are like a kitten stuck in a tree – once it goes up, it doesn’t know how tocome down on its own.

Source: NIS, InterCapital

INDICATOR CRO SLO SRB ROM BULGDP (YoY, %) 2,9 2,7 2,5 4,7 3,2ten-year yield (%) 2,8 3,4 6,5 1,9 1,5CPI headline (YoY, %) 0,2 1,3 1,6 0,1 0,1PPI (YoY, %) 0,0 0,5 2,2 0,9 0,6ind. Production (YoY, %) 14,9 10,2 3,9 3,9 7,0retail (YoY, %) 6,1 10,1 6,8 8,4 3,5unemployment (YoY, %) 14,8 7,5 16,9 4,8 8,0budget balance (% GDP) -1,3 -2,7 -4,6 -0,8 -1,7public debt (% GDP) 88,3 86,2 78,5 39,3 26,7

Macroeconomic indicators

bond curr. coupon price mid ytm

CROATIA

CROATI 18 EUR 5,875% 108,04 0,08%CROATI 22 EUR 3,875% 108,48 2,16%CROATI 25 EUR 3,000% 101,57 2,78%CROATI 17 USD 5,500% 100,88 1,70%CROATI 19 USD 6,750% 109,10 3,22%CROATI 20 USD 5,625% 109,71 3,57%CROATI 21 USD 6,375% 109,80 3,77%CROATI 23 USD 5,500% 106,87 4,21%CROATI 24 USD 6,000% 110,01 4,32%

SLOVENIA

SLOVEN 18 EUR 4,000% 104,80 -0,38%SLOVEN 18 USD 4,750% 103,40 1,94%SLOVEN 22 USD 5,500% 111,56 3,26%SLOVEN 23 USD 5,850% 113,94 3,35%SLOVEN 24 USD 5,250% 111,00 3,47%

SERBIA

SERBIA 17 USD 5,250% 102,31 2,17%SERBIA 18 USD 5,825% 105,27 2,84%SERBIA 20 USD 4,875% 103,32 3,70%SERBIA 21 USD 7,250% 113,40 4,04%SERBIA 24 USD 6,750% 101,64 6,47%

BULGARIA

BULGARIA 17 EUR 4,250% 101,89 -0,57%BULGARIA 22 EUR 2,000% 105,66 0,86%BULGARIA 24 EUR 2,950% 109,12 1,65%BULGARIA 27 EUR 2,625% 103,62 2,22%BULGARIA 35 EUR 3,125% 97,75 3,29%

ROMANIA

ROMANIA18 EUR 6,500% 108,80 -0,10%ROMANIA19 EUR 4,875% 112,75 0,17%ROMANIA20 EUR 4,625% 115,74 0,21%ROMANIA22 USD 6,750% 115,21 3,39%ROMANIA24 USD 4,875% 107,43 3,65%

Eurobonds

DUR. Zibor Euribor Belibor Robor(HRK) (EUR) (RSD) (RON)

O/N 0,39% n.a. 2,94% 0,45%1M 0,52% -0,37% 3,33% 0,62%3M 0,63% -0,33% 3,46% 0,81%6M 0,75% -0,24% 3,69% 1,04%9M 0,81% -0,16% n.a. 1,15%1Y 0,94% -0,10% n.a. 1,22%

Interest rates

ask

local sovereign, currency clause

RHMF-O-19BA

RHMF-O-203E

RHMF-O-227E

RHMF-O-247E

local sovereign, HRK

RHMF-O-17BA

RHMF-O-187A

RHMF-O-203A

RHMF-O-217A

RHMF-O-222A

RHMF-O-257A

RHMF-O-26CA

RHMF-O-282A

4,68 4,69

100,20 101,20 2,85% 2,75% 9,35 9,3607/02/2028

2,250%

2,875%

100,90 101,90 2,06% 1,85%

7,05 7,06

8,08 8,1014/12/2026 4,250% 112,50 113,70 2,79% 2,66%

104,10 1,96% 1,77%08/07/2021 2,750%

2,75% 2,60%114,20113,004,500%09/07/2025

103,30

07/02/2022

0,69%

217,38

4,12

6,15

0,750,75

4,12

2,73

6,142,81% 2,65%

2,73

ticker maturity couponprice ytm

10/07/2024

05/03/2020 6,500% 114,80 115,60

29/11/2019

22/07/2022 6,500% 121,50

bench.

spreadbid ask bid bid ask

m. duration

128,131,50% 1,23%

133,99

191,85

5,375% 110,50 111,30 2,58 2,59

4,68

2,741,51% 1,26% 2,74

4,672,27% 2,06%

5,750% 119,50 120,70

122,70

1,35

25/11/2017

1,35

0,19%104,65104,256,250%

05/03/2020 6,750% 115,30 116,00

10/07/2018 5,250% 105,85 0,74%

1,58% 1,37%

106,25 1,02%

quotations

5.25 5.108.10

4.38

8.058.78

-7.05

-0.70

1.00

3.28

3.78

4.90

-8.50

-6.50

-4.50

-2.50

-0.50

1.50

3.50

5.50

7.50

9.50

2001 2004 2007 2010 2013 2016

%, Y

oY

Romanian Annual GDP Change (%)

Q1 Q2

Q3 Q4

Avg



Day YTD 1YLast

Price EV/S P/EEV /

EBITDANet debt / EBITDA ROE (%) Div. Yld

CROBEX* 0,7% 8,7% 35,7% 2.169 1,26 24,02 10,17 2,23 5,1% 2,4%

SBITOP -0,1% 6,0% 13,4% 760 0,55 12,09 6,48 2,15 7,7% 4,8%

BELEX15 0,8% -1,2% 21,6% 709 0,82 28,76 5,71 0,61 2,5% 4,3%

BET -0,4% 7,4% 24,0% 7.609 1,07 17,00 3,45 -0,79 5,3% 7,0%

SOFIX -0,9% 2,4% 35,2% 601 0,96 12,61 7,61 1,47 5,0% 1,7%

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CRO Index

CRO10 Index

CROPLUS Index

Source: Bloomberg

Definite focus today is expected on Romania, as some of the main BET components publishedpreliminary 2016 statements this mornings. Here we bring you a brief overview:

[Romania – Banca Transilvania – TLV RO] The comparability of 2016 results to 2015 isimpacted by the big positive one-off related to the takeover of Volksbank in 2015 (RON 1.7bn).Still, Banca Transilvania recorded sound organic growth. On a consolidated level, net interestincome is down 10% to RON 1.8bn, followed by a 12% increase in net fee and commission income(to RON 545m). Net income is down by 48% to RON 1.3bn (up 60% excluding gains fromacquisition).

[Romania – Nuclearelectrica – SNN RO] Non-cons operating revenues are down 6% to RON1.7bn. This was followed by a 3% decrease in EBITDA and a 1% decrease in EBIT. Net profit standsat RON 109m, down by 27% YoY. Although EBIT was flattish, the bottom line was impacted bynegative FX.

[Romania – Transelectrica – TEL RO] Non-cons EBIT from profit allowed activities was down by35% to RON 277m. Zero profit activities recorded EBIT of RON 88m (+260%). Summed up, totalEBIT is down 19% to RON 364m. With rather unchanged result from financial activities, thebottom line is down 21% to RON 286m.

Earnings Season Kicks in Romania

Regional Equity Market

IC MARKET ESPRESSO

Important: Please read the references at the end of this report to possible conflicts of interest and disclaimers/disclosures 4

Yesterday Hrvatski Telekom published that within the scope of transformation a workersurplus was determined and that the company intends to reduce the number ofemployees by the end of March 2017. As a part of the restructuring process thecompany has been reducing its workforce for years now. At the end of 2010 it had 6,332full time employees, which was down at 4,639 at the end of Sep 2016 (-26.7%).However, the company pointed out that this will be the lowest number of workersleaving the company since the start of the transformation process. According to thepublication, the average severance payment cost per employee will amount to HRK230k, or about HRK 23m in total. In comparison, in 2014 HT paid cc. HRK 138m, in 2015cc. HRK 67m and in 2016 cc. HRK 51m.

The Management Board of the second largest bank in Croatia measured by total assets,PBZ Bank, proposed dividend payment in the amount of HRK 25.33 per share via theZagreb Stock Exchange. Among other topics, the discussion on the 2016 financial reportsand use of profits will be held on General Assembly on 27 March. The ex-dividend date is13 April, while the payment is envisaged on 20 April at the latest. Compared to the pricea day before this announcement, the amount of dividend gives a 2.96% yield.

HT Lays off Another 100 Workers, PBZ Proposes Dividend of HRK 25.33 per Share

Croatian Equity Market

Index fundamentals

Daily market snapshot

Volume: EUR 2.09m

* ATPLRA ZA and ADRSPA ZA are excluded from CROBEX multiples and ratios due to large one-off event / Market snapshot includes only main index components

IC.traderInterCapital.hr

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SBITOP Index

Source: Bloomberg

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140

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BELEX15 Index

BELEXLIN Index

Source: Bloomberg

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115

120

14-Jan-16 14-Apr-16 14-Jul-16 14-Oct-16

BET Index

BET-BK Index

Source: Bloomberg

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SOFIX Index

BGBX40 Index

Source: Bloomberg

Banca Transilvania 3,74 Intereuropa 13,94% Industrial Capital Holding -5,56%

BRD 1,40 Dalekovod 11,52% CB Central Cooperative Bank -4,58%

Energoprojekt holding 1,01 M+S Hydraulic 6,78% Belje -2,10%

Advance Terrafund REIT 0,66 Atlantska plovidba 4,69% Holding Varna -2,05%

Fondul Proprietatea 0,43 Ingra 4,41% Duro Dakovic -1,93%

Monbat 0,38 Uljanik Plovidba 3,74% CB First Investment Bank -1,77%

Transgaz 0,35 Valamar Riviera 3,21% Neochim -1,75%

Romgaz 0,32 Komercijalna banka 3,02% Eurohold Bulgaria -1,59%

Valamar Riviera 0,32 Stara Planina Holding 1,84% Luka Rijeka -1,53%

Volume (EURm) Winners Laggards

Volume: EUR 0.76m

Volume: EUR 1.06m

Volume: EUR 7.21m

Volume: EUR 1.60m



S&P 500 SECTOR PERFORMANCE % Day % YTD % 1M % 3M % 6M % 1Y % Day % YTD % 1M % 3M % 6M % 1Y

CONSUMER DISCRETIONARY 0,6% 6,0% 2,7% 8,1% 5,4% 24,1% INDUSTRIALS 0,1% 4,4% 2,9% 5,9% 10,2% 30,1%

CONSUMER STAPLES 0,1% 3,5% 4,0% 5,9% -2,1% 7,3% INFO TECH 0,3% 8,2% 4,8% 11,3% 11,2% 35,3%

ENERGY 0,1% -3,5% -2,1% 1,6% 4,7% 28,4% MATERIALS 0,1% 5,6% 3,2% 8,7% 7,8% 31,2%

FINANCIALS 1,2% 4,4% 3,3% 9,7% 24,8% 46,4% TELECOM SERVICES -0,1% -6,0% -3,9% 6,4% -7,3% 4,1%

HEALTHCARE 0,7% 5,5% 2,6% 3,4% -2,8% 13,1% UTILITIES -0,7% 0,9% 1,1% 5,3% -1,7% 8,0%

day 1 Y YTD

North/South AmericaDOW JONES 0,45% 28,36% 3,75%

S&P 500 0,40% 25,35% 4,41%

NASDAQ 0,32% 33,32% 7,42%

S&P/TSX 0,19% 27,50% 3,26%

BOLSA -0,57% 9,69% 3,83%

BOVESPA -0,38% 66,40% 10,77%

MERVAL 0,51% 71,17% 15,89%

IPSA -0,35% 18,02% 4,62%

Asia/PacificS&P/ASX 200 0,94% 19,94% 2,53%

NIKKEI 225 1,03% 21,32% 1,69%

HANG SENG 1,06% 26,61% 8,87%

SHCOPM -0,15% 17,00% 3,52%

KOSPI 0,45% 11,90% 2,83%

TWSE 0,83% 21,49% 5,90%

SET -0,35% 21,61% 1,55%

BSE SENSEX 30 -0,72% 19,45% 5,67%

Africa/Near East/RussiaFTSE/JSE 0,27% 2,66% 3,78%

XU 100 -0,15% 23,86% 12,56%

Hermes -1,84% 111,57% 3,07%

Tel Aviv 100 0,11% 5,59% -0,50%

MICEX 10 -0,50% 23,32% -4,66%

RTS 0,34% 66,56% 2,23%

Western EuropeDJ EURO STOXX 50 0,11% 16,76% 0,56%

FTSE 100 -0,14% 24,80% 1,76%

CAC 40 0,16% 18,97% 0,69%

DAX -0,02% 27,86% 2,53%

IBEX 35 0,28% 16,27% 1,69%

S&P/MIB 30 0,65% 12,59% -0,24%

SMI -0,43% 7,36% 2,51%

0,37% 33,02% 6,65%ATX

IndexChange (%)

U.S. equities closed higher Tuesday, posting new record highs, as investors digestedtestimony from the top Federal Reserve official.

Fed Chair Janet Yellen said in prepared remarks that waiting too long to raise interestrates would be "unwise," given the rise in inflation and economic growth. Marketexpectations for a rate hike next month rose to 23 percent from 16 percent followingYellen's remarks. Tuesday also marked the first time Yellen testifies following PresidentDonald Trump's election.

"The markets were anxiously awaiting Chair Yellen's comments, but not expectinganything out of the ordinary," said Myles Clouston, senior director at Nasdaq AdvisoryServices. "There's also some momentum chasing the market higher; we are at all-timehighs."

U.S. Equities Post New Records

Global Equity Market

IC MARKET ESPRESSO


STOXX EUROPE 600 SECTOR PERFORMANCE % Day % YTD % 1M % 3M % 6M % 1Y % Day % YTD % 1M % 3M % 6M % 1Y

AUTOMOBILES & PARTS 1,1% 3,7% 0,9% 14,2% 13,8% 24,4% INSURANCE 0,4% 5,8% 4,5% 8,8% 10,0% 18,5%

BANKS -0,7% 3,9% 2,4% 8,1% 8,3% 26,1% MEDIA -0,3% 0,1% 0,1% 10,8% 1,3% 2,6%

BASIC RESOURCES 0,7% 0,4% 2,7% 7,0% -6,7% 2,9% OIL & GAS -0,1% -2,9% -3,7% 10,2% 10,5% 27,9%

CHEMICALS -0,3% 2,7% 1,6% 9,2% 9,8% 21,8% REAL ESTATE 0,3% 1,2% 1,2% 7,2% 16,7% 17,1%

CONST. & MATERIALS 1,0% 3,3% 0,3% 9,8% 28,3% 23,4% RETAIL -0,3% -0,7% 0,9% 7,0% -6,8% -2,0%

CONSUMER GOODS 0,4% 1,8% 2,4% 8,9% 4,8% 4,2% TECHNOLOGY -0,4% 13,6% 6,4% 21,2% 40,8% 95,9%

FINANCIAL SERVICES -0,4% 1,4% 0,8% 6,9% -5,5% 1,2% TELECOM SERVICES 0,1% -2,4% -5,2% 4,0% -6,3% -8,8%

FOOD & BEVERAGE 0,1% 5,7% 4,3% 17,2% 7,5% 26,1% TRAVEL & LEASURE -0,0% 3,8% 2,2% 9,9% 8,6% 25,8%

HEALTH CARE -0,3% 2,9% 2,5% 6,9% -2,4% 5,9% UTILITIES 0,1% -0,3% 0,4% 1,7% 1,4% 1,2%

IND. GOODS & SERVICES -0,5% 3,6% 2,4% 10,3% 1,6% 10,7%



Today we are looking @ daily HTRA graph. It continues to move upwards and resistancethat provides high from 23/12/2013 @ 178,50 is in the reach. First support providesSMAVG50. Additional support provides high from 14/04/2015 @ 170. RSI is in upwardtrend and is above 50 points.

HTRA ZA - Resistance @ 178,50 (daily chart)

Technical Perspective - Region

Today we are looking @ daily DAX index. It breached resistance that was provided byhigh from 23/06/2015 @ 11635. Next resistance provides high from 26/05/2015 @11920 and psychological level @ 12000. First support provides high from 30/11/2015and SMAVG50. RSI breached red downward trend.

DAX - Support @ 11430 (daily chart)

Technical Perspective - Global

We would be sellers around 178,50

Trading Suggestion:

We would be buyers in case resistance @ 11920 gets breached

Trading Suggestion:

Technical Targets:12390… high 2015

12000… psychological level11920… high 26/05/2015

11772… last11635… high 23/06/2015

11516… SMAVG5011430… high 30/11/201510802… high 15/08/2016

Technical Targets:180,00… high 2017179,50… high 2016

176,95… last172,72… SMAVG50170,00… high 2015

IC MARKET ESPRESSO




Selected Equity Fundamentals (Trailing Basis) & Performance

Regional Equity Market; Fundamentals of Selected Companies

IC MARKET ESPRESSO


Company

Day YTD 1Y P/E P/BV P/CFO EV/SEV /

EBITDANet debt / EBITDA ROA (%) ROE (%) Dividend Div. Yld

Industrial

Koncar 2016-09 277,4 804,04 0,5% 16,5% 26,1% 13,67 0,88 20,40 0,56 7,45 -2,46 4,1% 6,4% 12,00 1,5%

Ericsson NT 2016-09 234,4 1.312,37 0,1% 12,7% 48,9% 19,72 7,46 9,70 1,02 11,05 -1,35 11,9% 37,9% 100,00 7,6%

Petrokemija 2016-09 29,2 16,90 2,6% -5,6% 73,5% -3,08 2,12 14,13 0,44 18,92 14,31 -6,1% -69,0% 0,00 0,0%

Duro Dakovic 2016-12 47,1 46,17 -1,9% 2,3% 32,1% -17,32 3,85 -2,87 1,21 40,51 19,26 -2,9% n/a 0,00 0,0%

AD Plastik 2016-09 84,9 150,62 -0,3% 8,7% 56,2% 14,03 0,96 -21,32 1,03 7,79 2,79 3,4% 6,9% 12,00 8,0%

Gorenje 2016-09 155,8 6,38 0,2% 6,4% 47,0% 28,14 0,43 2,54 0,45 6,24 4,51 0,5% 1,5% 0,00 0,0%

Cinkarna 2016-09 153,9 188,90 2,1% 16,6% 162,4% 15,20 1,05 16,08 0,77 5,17 -1,00 5,5% 6,9% 4,20 2,2%

Metalac 2016-06 28,0 1.700,00 0,0% 0,8% 32,3% 8,00 0,77 7,11 0,48 5,00 0,36 5,8% 9,6% 155,00 9,1%

Jedinstvo 2016-06 10,1 4.102,00 -0,1% 0,0% 2,6% 3,95 0,25 -1,31 0,07 0,67 -1,56 3,2% 6,3% 211,76 5,2%

Alfa Plam 2016-06 49,4 35.000,00 0,0% 0,0% 12,9% 9,24 0,92 6,74 0,77 5,96 -2,22 7,9% 10,0% 1.000,00 2,9%

Messer Teh. 2016-06 110,5 13.200,00 0,8% 1,5% 68,5% 3,44 0,83 7,17 1,04 2,59 -1,85 22,4% 24,0% 1.801,00 13,6%

Gosa Montaza 2016-06 4,8 2.302,00 0,0% -4,1% 45,2% 4,86 0,58 -27,64 -0,05 -0,53 -4,26 7,1% 11,9% 142,00 6,2%

Neochim 2016-09 92,8 68,40 -1,8% 14,8% 45,5% 10,61 2,36 11,77 0,87 6,58 0,78 12,9% 22,3% 0,80 1,2%

Monbat 2016-09 196,8 9,87 -0,3% 2,2% 34,8% 17,24 2,06 -31,33 1,94 11,98 2,40 6,8% 11,9% 0,28 2,8%

MS Hydraulic 2015-12 137,7 6,90 6,8% 3,8% 40,2% 31,52 4,25 15,75 2,94 15,17 -0,83 11,7% 13,5% 0,22 3,2%

Last availab. FS Last price

Change

M. Cap( EURm)

Fundamental indicators

Utility

Electrica 2016-09 1.046,2 13,62 0,1% 3,5% 19,5% 12,08 0,72 8,13 0,51 2,92 -3,51 4,7% 6,0% 0,86 6,3%

Transgaz 2016-09 852,2 326,00 -0,3% 10,9% 26,4% 8,29 1,07 7,03 1,76 3,95 -1,14 9,1% 12,8% 27,61 8,5%

Transelectrica 2016-06 531,4 32,65 0,0% 11,8% 19,8% 8,55 0,80 3,21 0,77 3,19 -0,22 5,5% 9,3% 2,65 8,1%

Janaf 2016-12 851,6 6.300,01 0,0% 18,9% 39,9% 21,81 1,69 13,75 7,92 10,52 -1,36 7,2% 7,8% 132,15 2,1%

Energy

INA 2016-09 4.293,3 3.200,46 0,0% 10,4% 23,1% -22,00 2,99 18,84 2,35 19,43 1,69 -7,2% -13,6% 0,00 0,0%

NIS 2016-09 983,2 747,00 -0,4% 0,9% 36,3% 10,73 0,63 3,68 1,20 6,36 2,87 3,1% 5,9% 24,69 3,3%

OMV Petrom 2016-09 3.521,5 0,28 -1,2% 7,3% 29,0% -19,76 0,60 3,53 1,00 3,13 0,05 -1,9% -3,0% 0,00 0,0%

Romgaz 2016-09 2.353,4 27,50 -0,2% 10,0% 13,6% 11,36 1,13 6,59 2,32 4,57 -1,37 9,1% 10,0% 2,70 9,8%

Nuclearelectrica 2016-09 403,0 6,02 0,0% 25,3% 8,7% 22,48 0,24 2,99 1,05 2,80 -0,14 0,9% 1,1% 0,33 5,5%

Pharma

Krka 2016-09 1.688,9 51,50 -1,0% -2,6% -15,0% 16,06 1,20 6,46 1,41 6,58 -0,23 5,8% 7,5% 2,65 5,1%

Galenika Fito. 2016-06 57,5 2.696,00 1,2% -0,9% 19,8% 7,47 1,04 17,45 1,36 4,98 -1,71 12,4% 14,0% 80,00 3,0%

Sopharma 2016-09 233,4 3,39 0,2% 13,6% 30,2% 13,93 0,99 2,75 0,74 6,23 1,83 3,9% 7,1% 0,07 2,1%

Construction

Ingra 2016-09 8,6 4,74 4,4% 54,9% 74,3% 0,79 0,71 -2,51 11,22 3,67 3,32 9,0% 89,6% 0,00 0,0%

Tehnika 2016-09 18,8 740,44 2,7% 60,8% 196,2% -37,44 0,45 -4,90 0,81 14,06 9,54 -0,4% -1,2% 0,00 0,0%

IGH 2016-09 29,2 354,26 -0,4% 96,4% 307,5% -3,29 14,66 17,01 4,36 -11,83 -7,87 -10,5% -446,0% 0,00 0,0%

Viadukt 2016-09 22,5 367,67 1,6% 19,8% 28,9% -40,59 0,48 6,62 0,43 4,39 2,07 -0,4% -1,2% 0,00 0,0%

Hidroelektra 2016-09 4,4 52,89 -3,8% 38,1% 140,4% -0,44 -0,28 -1,69 0,92 -1,71 -1,18 -27,7% n/a 0,00 0,0%

Dalekovod 2016-09 60,7 18,30 11,5% 34,8% 56,4% 27,35 1,31 7,79 0,94 10,37 6,00 1,0% 4,8% 0,00 0,0%

Energoprojekt 2016-06 111,6 1.265,00 1,2% -11,6% 35,9% 13,31 0,71 14,07 0,38 5,29 -0,51 2,4% 5,3% 20,00 1,6%





IC MARKET ESPRESSO


N/A


Tourism

Liburnia Riviera 2016-09 153,9 3.791,43 1,5% 3,3% -5,2% -218,90 1,46 11,85 4,54 9,88 0,42 -0,5% -0,7% 0,00 0,0%

Valamar Riviera 2016-09 718,3 42,49 3,2% 22,8% 83,8% 20,66 2,33 9,74 4,23 12,09 1,51 6,4% 11,3% 0,60 1,4%

HUP Zagreb 2016-09 164,9 2.845,00 -1,4% 1,7% 52,5% 16,44 1,54 15,71 4,45 10,54 1,05 6,4% 9,4% 15,00 0,5%

Maistra 2016-09 425,1 289,57 1,7% 14,5% 36,0% 22,29 2,00 9,67 4,10 11,07 2,26 5,2% 9,0% 0,00 0,0%

Turisthotel 2016-09 167,3 3.400,00 0,0% 15,3% 41,2% 15,93 3,29 12,57 5,28 11,36 -1,58 16,0% 20,6% 45,00 1,3%

Plava Laguna 2016-09 455,9 6.220,09 -2,0% 13,1% 46,4% 13,87 1,61 8,82 3,59 9,33 0,38 7,6% 11,6% 0,00 0,0%

Arenaturist 2016-09 165,7 566,07 -1,1% 20,8% 69,2% 42,82 1,53 10,69 4,04 12,74 3,33 1,9% 3,6% 0,00 0,0%

Albena 2016-09 132,8 60,80 0,3% -1,1% 30,7% 67,80 0,61 18,40 3,23 12,83 2,49 0,7% 0,9% 0,45 0,7%

Shipping

Atlantska Plov. 2016-09 61,6 328,91 4,7% 16,4% 225,4% -2,74 0,77 10,40 5,10 -19,65 -13,52 -9,2% -28,2% 0,00 0,0%

Jadroplov 2016-09 9,8 44,64 -7,7% 9,6% 218,9% -0,45 0,21 -1,00 9,76 -5,01 -4,25 -19,9% -47,8% 0,00 0,0%

Uljanik Plovidba 2016-09 12,9 166,32 3,7% 4,0% 44,0% -0,19 2,96 0,33 7,00 -3,39 -3,12 -40,2% -1593,2% 0,00 0,0%

TNG 2016-09 91,7 78,27 0,3% 4,4% 10,2% 15,64 1,10 6,28 5,69 11,55 5,86 3,1% 7,0% 3,95 5,0%

Telecommunications

HT 2016-09 1.938,1 176,43 0,3% 4,4% 25,1% 14,93 1,21 6,33 1,56 3,98 -1,36 6,9% 8,1% 6,00 3,4%

Telekom Slo. 2016-09 545,1 83,40 -0,1% 17,3% 13,6% 28,49 0,78 2,78 1,31 4,77 1,95 1,4% 2,7% 5,00 6,0%

Infrastructure

Luka Ploce 2016-09 31,8 560,29 -0,9% -1,9% -11,0% -11,92 0,58 -22,37 0,28 -3,68 13,67 -4,6% -4,9% 0,00 0,0%

Luka Rijeka 2016-09 84,8 46,87 -1,5% -2,2% 20,6% -414,09 0,92 -45,04 3,33 -328,97 101,41 -0,2% -0,2% 0,00 0,0%

Luka Koper 2016-09 386,5 27,61 -0,7% 10,4% 31,5% 10,00 1,19 5,90 2,58 6,77 1,66 8,1% 11,9% 1,13 4,1%

Aerodrom N.T. 2016-09 318,3 1.150,00 0,0% -0,5% 26,4% 11,05 1,45 11,38 4,67 8,07 -1,00 12,2% 13,1% 60,25 5,2%

Food

Viro 2016-09 74,8 401,94 -4,3% 4,9% 61,4% -54,45 1,35 -4,79 1,00 13,24 5,62 -0,8% -2,5% 0,00 0,0%

Jamnica 2016-09 386,1 130.090,19 -5,2% -6,5% 23,9% 8,60 1,51 6,44 0,72 5,15 -2,07 11,0% 17,5% 2.197,00 1,7%

Cakovecki Mlin. 2016-09 90,1 6.400,01 0,0% -0,9% 28,0% 12,57 1,11 6,43 0,49 6,48 -1,32 6,1% 8,8% 60,00 0,9%

Kras 2016-09 102,9 558,23 0,0% 3,5% 11,1% 38,17 1,25 12,35 0,91 11,20 1,93 1,7% 3,3% 0,00 0,0%

Ledo 2016-09 387,4 9.199,11 -1,0% -13,7% 5,0% 9,61 1,48 9,40 0,96 5,35 -1,69 10,9% 15,3% 425,01 4,6%

Belje 2016-09 23,1 20,95 -2,1% -10,2% -6,1% -3,82 0,09 1,24 0,89 9,52 8,33 -1,2% -2,3% 0,00 0,0%

Atlantic Grupa 2016-09 422,1 943,76 0,1% 6,7% 16,9% 12,80 1,52 14,32 0,94 9,17 3,31 4,6% 11,9% 13,50 1,4%

Sojaprotein 2016-06 78,2 650,00 -0,2% 5,2% -23,5% 23,79 0,81 113,94 0,90 11,52 4,28 1,6% 3,4% 0,00 0,0%

Retail

Tisak 2016-09 47,3 147,77 -5,2% -4,7% -13,1% 38,71 1,36 12,84 0,06 2,08 -2,03 0,9% 3,5% 0,00 0,0%

Medika 2016-09 71,3 17.608,00 0,0% 2,5% 39,7% 8,92 1,19 -15,21 0,30 10,36 3,50 2,7% 13,4% 0,00 0,0%

Mercator 2016-09 402,0 66,00 0,0% -2,9% -21,4% -156,79 0,63 7,92 0,50 12,05 8,27 -0,1% -0,4% 0,00 0,0%

Petrol 2016-09 692,4 331,90 0,6% 2,1% 28,9% 9,35 1,19 8,23 0,31 7,79 3,00 5,2% 12,7% 12,60 3,8%

Company




Change

M. Cap( EURm)






IC MARKET ESPRESSO


Company




Change

M. Cap( EURm)


Diversified

Adris Grupa 2016-09 1.211,6 494,77 0,3% 8,4% 44,8% -10,49 0,89 -40,35 1,52 n/a n/a -4,3% -8,5% 15,00 3,0%

Podravka 2016-09 391,2 409,62 -0,9% 8,0% 31,6% 6,96 1,01 5,39 0,94 8,13 2,31 8,2% 14,6% 7,00 1,7%

Industrial Capital 2016-09 33,8 4,25 -5,6% -2,8% 30,6% 5,01 0,53 3,35 0,22 1,55 -1,00 9,1% 10,6% 0,00 0,0%

Industrial Hold. 2016-09 38,1 0,96 0,2% -5,6% 20,2% -6,48 0,26 4,55 1,98 18,25 10,77 -2,6% -4,0% 0,00 0,0%

Stara Planina 2016-09 71,4 6,65 1,8% 2,5% 84,0% 8,17 0,85 5,25 0,55 3,36 -1,30 8,7% 10,4% 0,21 3,1%

Holding Varna 2016-09 81,3 30,36 -2,1% -8,0% 26,5% 236,58 0,86 12,92 6,24 33,76 17,52 0,2% 0,4% 0,00 0,0%

Chimimport 2016-09 197,9 1,62 -0,6% -3,3% 24,8% 6,59 0,24 2,08 N/A N/A N/A 0,7% 3,7% 0,00 0,0%

Eurohold 2016-09 44,3 0,68 -1,6% 4,3% 0,4% -0,98 0,62 1,87 N/A N/A N/A -8,4% -63,9% 0,00 0,4%

Stock Exchange

BVB 2016-09 50,6 29,70 -0,3% 2,4% 15,1% 34,08 2,14 7,22 3,14 14,84 -19,05 3,0% 6,3% 0,87 2,9%

NAVPS Dividend Div. YldLast

availab. FS Last price Day YTD 1YM. Cap

Change

Disc. to NAV (3Y) ROA(%) ROE(%)


Disc. to NAV (curr)

Disc. to NAV (1Y)P/E P/BV

Funds / REIT's

Fondul Propriet. 2016-09 2.176,7 0,89 -0,1% 12,5% 31,1% 22,38 0,87 1,20 -25,4% -21,2% -23,9% 3,9% 3,9% 0,05 5,6%

Bulgarian REIT 2016-09 22,9 2,23 1,1% -1,9% 34,8% 32,19 0,66 N/A N/A N/A N/A 1,8% 2,0% 0,00 0,0%

Adv. Terra. REIT 2016-09 91,8 2,11 -0,9% 1,0% -0,5% 23,14 0,80 N/A N/A N/A N/A 3,3% 3,5% 0,10 4,7%

Dividend Div. Yld

Change

Last availab. FS Last price Day YTD 1Y Leverage

Loans vs. Deposits

M. Cap(EURm) P/E P/BV ROA(%) ROE(%)

NII / assets

NF&CI / assets


Banks

ZABA 2016-09 2.685,8 62,52 0,9% 15,8% 64,8% 12,08 1,09 6,89 91,2% 2,7% 1,0% 1,3% 9,0% 0,00 0,0%

PBZ 2016-09 2.201,8 860,49 0,7% 11,9% 53,7% 10,55 1,16 5,72 85,1% 3,2% 1,6% 1,9% 11,0% 10,16 1,2%

AIK Banka 2016-06 147,6 1.850,00 0,0% 5,7% 2,8% 3,89 0,33 3,21 78,1% 4,0% 0,5% 2,6% 8,5% 0,00 0,0%

Komercijalna B. 2016-06 233,4 1.772,00 3,0% 2,0% 21,0% -2,77 0,48 7,18 56,5% 3,3% 1,2% -2,4% -17,3% 63,00 3,6%

Banca Transil. 2016-09 2.036,0 2,52 -0,6% 5,5% 32,3% 10,79 1,68 8,82 71,0% 4,6% 0,0% 1,8% 15,6% 0,39 15,5%

BRD 2016-09 1.813,5 11,72 -0,3% -1,3% 19,6% 11,47 1,22 7,48 76,5% 3,1% 1,6% 1,4% 10,6% 0,32 2,7%

CCB 2016-09 87,9 1,52 -4,6% -0,7% 50,6% 4,48 0,44 13,07 55,3% 2,3% 0,9% 0,8% 9,9% 0,00 0,0%

FIB 2016-09 215,5 3,83 -1,8% 14,4% 85,9% 5,50 0,51 10,71 67,3% 3,6% 1,0% 0,9% 9,3% 0,00 0,0%

Dividend Div. YldP/ELast

availab. FS Last price Day YTD 1YM. Cap(EURm)

Net margin ROA(%) ROE(%)P/BV P/GWP Leverage

Combined Ratio

Insurance

Sava Re 2016-09 275,5 16,00 -0,1% 21,0% 35,6% 8,3 0,9 0,6 5,7 91,5% 6,1% 2,0% 11,1% 0,80 5,0%

Triglav 2016-09 591,6 26,02 -0,7% 12,2% 12,5% 9,6 0,8 0,6 4,9 94,3% 5,5% 1,7% 8,4% 2,50 9,6%

CO 2016-09 345,8 5.999,00 0,0% 8,1% -9,1% 15,9 1,0 0,9 4,1 100,2% 4,9% 1,5% 6,4% 0,00 0,0%



Common Common

HOLD 604,00

Preferred Preferred

BUY 512,00

Fondul

Proprietatea

23 March

2016

STRONG

BUY0,99 0,89 10,7%

-managed by Franklin Templeton, a top class

fund management company

-high exposure to energy sector

-significant discount to NAV

-about 60% of the fund's NAV is made by

unlisted companies

-possible privatizations of portfolio

companies

Đivo Pulitika

AD Plastik

Group150,62 -100,0%

- stable dividend payment

- Edison projekt and recovery in Europe

- presence in Russia

89,32

- consolidation of suppliers in the

automotive industry

- exposure to cyclic automotive sector

14 July

2015

BUY

- attractive dividend yield

- Standard & Poor’s "A-" rating

with stable outlook

Triglav

Group

3 May

2016

UNDER

REVIEW

HOLD 28,58

NIS

Group

9 September

2015747,00 -27,9%

- attractive valuation in relation to peers

- high domestic market share

- potential for development outside Serbia

- lack of transparency

- macroeconomic pressures

- dependence on oil prices

and refining margins

7,1%

- stable structure of debt

- risk of permanent competitive

pressure on prices

Đivo Pulitika

Group

Telekom

Slovenije

1 October

201583,40

Đivo PulitikaBUY 954,34

- restructuring of operations in progress

- risk of a large number of litigations

- leading regional insurer

- potential for further expansion

in Ex-Yu countries

- one of the largest hospitality groups

- multi-destination portfolio in key Adriatic

regions, Istria and Dubrovnik

- quality brand/product portfolio

- strong position on Ex-Yu markets

- strategic alliance with Panasonic

Đivo Pulitika

Đivo Pulitika

Đivo Pulitika

6,38 -23,2%

26,02 9,8%

- lack of economies of scale

- dependence on input prices as well as

currency translation differences

- potential expansion of the

accommodation portfolio via M&A

- dependence on tourism development

Đivo Pulitika

STRONG

BUY4,90

23 February

2016331,90 5,5% Đivo Pulitika

Krka Group7 January

201551,50 -100,0%

- exposure to new markets (Russia)

- dual listing in Warsaw

- ownership restructuring

- strong retail player

- strong fundamentals

- continuing sales growth

despite crisis effects

- stable cash flow

- high level of debt

STRONG

BUY350,06

UNDER

REVIEW

Recommend-

ationTarget price Last price Difference

-8,8%

-22,5%

11 July

2016943,76 1,1%

11 May

2015SELL 1017,10 1.312,37

Investment Thesis

- large share of foreign sales

- substantial cost-cutting potential

- divesting as a profitability

growth opportunity

- moderate level of debt

- strong cash position

- large investments in tourism portfolio

expected to increase RevPAR and returns

- further restructuring and economic

recovery expected to propel the insurance

business

Analyst

Đivo Pulitika

Končar

Group804,04 -2,1%

03 August

2015BUY 786,87

Ericsson

Nikola Tesla

CompanyLast

research

Adris Group20 December

2016

590

Đivo Pulitika

Podravka

Group

31 July

2015

Hrvatski

Telekom176,43

409,62

29 January

2016

Đivo Pulitika

494,77 3,5%

-100,0% Đivo Pulitika

2,3%

- weak revenue growth potential

- profitability above peer

group's average

- dividend player

- low level of debtBUY 160,95

UNDER

REVIEW

Valamar

Riviera

21 September

201542,49 -100,0%

SELL 538,68

- historically inconsistent strategy related to

often changes in management

- future capacities rely on strong CAPEX and

Slovenia's investments in railway

UNDER

REVIEW

Đivo Pulitika

- high return on equity

- largest dividend yield

on Croatian market

- foreign markets as an opportunity

- high dependence on government deals

- best in the class standards of corporate

governance

- continuing profitability improvements

- strong presence in the region

- diversified product portfolio and vertically

integrated business mode

- growing presence in Eastern

European markets

- dependence on telco investments

- majority stake owned by

the government

- profit margin presssure

Đivo Pulitika

Atlantic

Grupa

Đivo Pulitika

Petrol Group

Luka Koper13 October

2015BUY 25,66 27,61 -7,1%

- attractive valuation compared to peer port

operators

- recovery of regional economies and their

trade with the rest of the world

Đivo Pulitika

Đivo Pulitika

Tankerska

Next

Generation

24 August

2016HOLD 65,00 78,27 -17,0%

- dislocation of refineries

- experienced fleet manager

- attractive cost structure compared to peers

- possible asset play

- stable earnings due to time charters

- complete exposure to a single market

segment

Gorenje

Group

17 November

2015

Sava Re

Group

30 November

2015

STRONG

BUY17,22 16,00 7,6%

-successful integration of Zavarovalnica

Maribor

-growth opportunities in the regional

insurance markets

-possible interest rate hikes

-absence of major loss events pushes up

results for now

Đivo Pulitika

Overview of Investment Recommendations

InterCapital Research Coverage Universe

IC MARKET ESPRESSO




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InterCapital Group

IC MARKET ESPRESSO


InterCapital is an independent investment company established in 2001, and is one of the leading companies fortrading of financial instruments, asset management and investment banking services in the Republic of Croatia.Our mission is to further advance the ongoing development of our domestic capital markets through the introduction and implementation of innovative financialproducts, know-how and sophisticated international standards in financial mediation services. In doing so, we aim to provide superior returns to our diverse customerbase. Experience, knowledge, dedication, reputation and ethical conduct are at the heart of our business. These characteristics are uncompromisingly embedded in eachof our employees, ultimately guaranteeing professional quality and dedication in our approach to clients, our product portfolio and overall mission achievement.The InterCapital Group is headquartered in Zagreb and employs more than 40 individuals.

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INVESTMENT BANKING (tel: + 385 1 48 25 866, mail: [email protected])Investment Banking helps companies improve their competitiveness by defining and implementing optimal financial strategies, which is a prerequisite for survival intoday’s dynamic business environment. As a highly specialized segment of the financial services industry, investment banking requires expertise of local financialmarkets, knowledge of specific needs facing companies and capabilities in structuring and executing optimal solution(s) with the end goal of creating new value for theclient. Our investment banking activities are divided into two streams:

financing through the capital markets (debt issues (commercial papers & bonds) and equity issues (public and private equity offerings), as well as official marketlistings

financial advisory services (mergers and acquisitions, financial analysis and company valuations, due diligence services, business restructurings and spin-offs,MBO and ESOP programs)

INSURANCE BROKERAGE (tel: + 385 1 54 96 166, mail: [email protected])InterCapital Risk is specialized in obtaining advanced insurance and reinsurance solutions not only on domestic insurance market but also on established markets likeLloyd’s of London, Bermuda etc. Managing operational risks and insurance brokerage is our core business, while courtesy, innovation and professionalism are the driversof our business philosophy. Although InterCapital Risk is a new insurance brokerage and risk management operation on the market, its employees are proven specialistsin this business with considerable success records.

CUSTODY SERVICE (tel: + 385 1 48 25 844/845, mail: [email protected])With the continued monitoring of our clients’ needs and investing in the development of new and increasing the quality of existing services, we have developed asecurities custody service. InterCapital offering its clients trading on the domestic, as well as on foreign stock exchanges, enables to simultaneously perform followingservices:

payment and settlement of securities in the world’s leading markets; storage and safekeeping of securities in various global depository; managing investment positions with maximum professionalism and discretion; continuous reporting to clients; collection of inflows generated from interests, dividends and other income relating to assets in the custody account and monitoring of other corporate actions.

These services can be achieved with the minimal additional time and administration, as well as maximum flexibility and support ofour professional employees. Software support is achieved through the incorporation of custodial services through IC.trader trading platform.

iCAPITAL (tel: + 385 1 48 25 897, mail: [email protected])iCapital.hr has been designed and implemented as an investment and educational portal, providing information needed when making investment decisions, all available inone place. On iCapital.hr you can track market trends of domestic and foreign stocks, using technical and fundamental analysis, monitor daily changes in the top 10shareholders of the Zagreb Stock Exchange, vote in Sentiment surveys, monitor the performance of own portfolios, read daily market reviews and comments, participatein discussions through the Forum, compare Croatian investment funds, as well as play and inform yourself. Visit us on www.icapital.hr - the leading Croatian Communityof traders and investors.


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Notice to Investors and Explanation of Investment Recommendations

Disclaimer

IC MARKET ESPRESSO

„IC Market Espresso“ is a Recommendation that proposes investment strategy in terms of one or more financial instruments or the Issuer offinancial instruments, including opinions about current or future value and price of these instruments. Market Espresso is published every workday.The first issue was published on 2 January 2008, while the technical analysis of Croatian equities and index was introduced on 1 September 2008.Information in this report is intended for informative purposes only and does not represent the solicitation to buy or sell any financial instruments orparticipate in any particular trading strategy.

Market Espresso is based on publicly available information (Stock Exchanges, Bloomberg, financial reports of Issuers, companies' management,business and other websites). Although we believe our information and price quotes to be reasonably reliable, we do no guarantee their accuracy orcompleteness. In addition, the price or value of financial instruments described in this report may fluctuate and realize gains or losses. InterCapitalSecurities Ltd. does not assume responsibility for any damage caused by the use of published information and projections contained in this reportOpinions in this report constitute the current judgement of the author/s as of date of this report and are subject to change without notice.

Recommendations in IC Market Espresso are based on fundamental analysis and instruments and rules of technical analysis. Technical analysis is avaluation method of financial instruments made by analysing statistically generated market activities such as historical prices and trading volumes.Technical analysis usually uses various types of graphical displays, on the basis of which special techniques try to predict future trends. The maintask of technical analysis is to attempt to identify historical price movements and accordingly identify possible future trends.

Fundamental analysis is a financial analysis of industries and companies based on factors such as sales, assets, profit, products or services,markets and management. In conducting fundamental analysis, InterCapital Securities Ltd. uses various methods to determine a value of the Issuer.Among the rest, analysis of comparable companies, discounted cash flow and other methods are being used. Although InterCapital Securities Ltd.uses models generally accepted in the financial industry and theory, the results of these models depend on plans and information obtained from theIssuer as well as subjective opinions of analysts.

The authors of technical and fundamental analyses in IC Market Espresso are Đivo Pulitika, Margareta Maresić and Marcel Dimač. They areemployees of InterCapital Securities Ltd. registered in Zagreb, Masarykova 1. InterCapital Securities Ltd. is supervised by Croatian Financial ServicesSupervisory Agency (HANFA).

Fundamental rating values of an Issuer are given according to the following scale:

•Strong buy - equities with expected absolute revenue of more than 20% in the monitored time period•Buy - equities with expected absolute return of 10%-20% in the monitored time period•Hold - equities with expected absolute return of -10% to 10% in the monitored time period•Sell - equities with expected absolute return below -10% in the monitored time period•Under review - an issuer might be placed Under Review due to new information which is not included in the analysis.

Up to August 14, 2014 the Hold recommendation was used for equities with an expected return of 0% to 10%, while the Sell recommendation wasused for equities with an expected negative absolute return. Criteria for other recommendation remained unchanged.

InterCapital Securities Ltd. is in possession of the following equities:

Analysts engaged in creation of IC Market Espresso and/or related persons are not in possession of significant financial interests in one or morefinancial instruments which are subject to recommendation or significant conflicts of interest in relation to any of the issuers in accordance withArticle 475 of the Capital Market Act.

The company InterCapital Securities Ltd. acts as a market maker for ADPLRA ZA, PODRRA ZA, HTRA ZA, KOEIRA ZA, TPNGRA ZA, ATGRRA ZA andRIVPRA ZA.

Issuer recommendations stated in IC Daily - Market Espresso are not declared to the Issuer before they are published. In the last 12 months periodInterCapital Securities Ltd. served as a listing agent for the TPNGRA ZA shares on the Official market of the Zagreb Stock Exchange. Inc.

Any investments indicated in the report constitute risk, are not readily available in all jurisdictions, can be illiquid and may not be suitable for allinvestors. Value or income realized on any one investment mentioned in the report may vary. If a financial instrument is denominated in a currencyother than an investor's currency, a change in exchange rates may adversely affect the investment. Past performance is not necessarily indicative offuture results. Investors must make their own informed investment decisions without depending on this Recommendation. Only investors withsufficient knowledge and expertise in financial dealings who are able to evaluate risk and return may consider investing in any form of securities ormarkets indicated herein.

Protection of copyright and data base contained in this Recommendation is of great importance. The report may not be reproduced, distributed orpublished by any person for any purpose without prior consent given by InterCapital Securities Ltd. Please cite source when quoting. All rights arereserved.

Number Share

Companies which InterCapital Securities

Ltd. provided investment banking service

within last 12 months

Strong Buy 4 21.1% -

Buy 6 31.6% ATGR-R-A

Hold 3 15.8% -

Sell 2 10.5% -

Under Review 4 21.1% ADPL-R-A

4Q 2016 (1 October - 31 December 2016)

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