swb19equityweekly11.05.2009

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Equity Research Swedbank Markets Page 1 of 6

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

Estonia

Olympic Entertainment Group posted Q1 09 results last Friday anothersizable net loss though not as big as in Q4 08. Sales were 31m andoperating loss reached 6.2m. Share reacted positively as market focused onthe positives company announcing it will save up to 30m in costs in 2009(still looking at negative EPS for 2009 but 2010 should be in black). Thiswas welcome news but as the case with other discretionary stocks theassumption must be that we have seen the bottom (Nov-Jan). This is tooearly to say in our view, and we expect the gaming markets in Latvia andLithuania to contract further this year. Estonian gaming market took a sharpadjustment (50% + down YoY) and we anticipate it will stay at that level till

the end of they year and recover will be slow and number of casinos willdecline to around 20 by year end with 20-25 slots per casino. The companyhas traditionally outperformed the market and we believe this will be thecase once again. Once the situation improves OEG should increase itsmarket share in the Baltics. The balancing out of costs with new reducedrevenue level will take up to a year and 2H 2010 is when we should seereturn to normal profitability assuming no further reductions in salaries andrent costs are made. The company can probably further reduce its taxexpenses by lowering number of slots per casino outside of Baltics but atthis point we see little indications of that. Poland has become OEGs biggestmarket and in future it is our opinion that along with Slovakia it will becomeits main expansion area. TP 1.31 is under review as we makingadjustments to revenues and costs taking into account the cost cuttingmeasures, but keep target price at high risk BUY until next update is

published.

Baltic Indices

170

185

200

215

230

245

8-Feb 22-Feb 8-Mar 22-Mar 5-Apr 19-Apr 3-May

Baltic Benchmark OMX Tallinn*

OMX Riga* OMX Vilnius*

Source: Reuters, Swedbank* Relativ e to Baltic Benchmark

Trai l. 4 Q 09F Last Q 09F

Arco Vara 0.13 30.0% 1102463 -0.2 -1.6 0.3 0.3

Balt ika 0.57 23.9% 254893 -8.8 0.6

Eesti Telekom 4.84 -1.2% 370831 7.3 8.0 2.4 2.5

Ekspress Grupp 0.65 6.6% 19136 3.9 2.9 0.3 0.3

Harju Elekter 0.89 -3.3% 60524 7.4 19.2 0.6 0.6

Jrvevana 0.26 23.8% 13255

Merk o Ehitus 2.45 6.5% 458467 2.3 3.9 0.3 0.3

No rd ec on Interna ti on al 0.69 4.5% 114967 1.4 1.8 0.4 0.4

Norma 2.75 0.0% 26920 6.0 9.9 0.6 0.6

Olym pic Entertainment Grou 0.51 21.4% 469181 -2.6 -24.1 0.7 0.6

Sil va no Fa shi on Gro up 0.42 13.5% 50041 -2.2 4.6 0.4 0.3

Tallink 0.37 15.6% 1669069 53.6 -52.5 0.4 0.4

Ta llin na K aubam aja 2.10 13.5% 49348 16.1 5.7 0.7 0.6

Tallinna Vesi 8.70 -2.2% 10719 9.2 8.0 2.1 2.0

Viisnurk 0.69 -2.8% 3450 8.0 4.3 0.7 0.6


Grindeks 2.53 1.2% 54216 2.7 3.7 0.5 0.4

Latvian Gas 4.01 0.2% 1102 7.9 0.5

Latvian Shipping Company 0.47 6.8% 9206 1.8 1.3 0.2 0.2

Latvijas Balzams 0.91 -2.2% 725 3.1 0.2

Liepajas Metalurgs 0.76 -3.8% 9594 0.7 0.2

Olainfarm 0.37 -5.1% 15830 -4.6 14.9 0.3 0.3

SAF Tehnika 0.37 -2.6% 12252 -1.2 0.6 0.1 0.1

Va lm ie ra Fi bre Glas s 0.3 5 2.9% 20219 0.6 0.3

Ventspils Nafta 0.73 -2.7% 22842 2.1 0.2


Apranga 1.64 8.6% 313654 4.3 10.1 0.6 0.6

City Service 3.20 2.6% 3980 6.0 3.8 1.0 0.8

Grigiskes 0.38 5.6% 19900 -5.3 0.4

Invalda 1.32 -21.4% 444669 -0.7 0.3

Klaipedos Nafta 0.89 0.0% 369772 10.6 0.7

Lietuvos Dujos 1.07 -7.0% 58650 7.8 8.0 0.3 0.3

Lietuvos Energija 1.56 -1.9% 10772 25.4 0.4

Lietuvos Juru Laivininkyste 0.39 0.0% 182566 -4.0 0.3

Lifosa 20.76 -2.1% 4075 1.8 0.5

Panevezio Statybos Trestas 1.53 2.0% 93151 0.7 0.2

Pieno Zvaigzdes 2.26 7.6% 3177 -28.3 4.1 0.9 0.7

Rokishkio Suris 1.70 -7.1% 104419 -3.9 0.4

RST 1.23 -0.8% 26475 -7.4 0.3

Sanitas 6.55 -3.0% 15585 -97.3 0.7

Siauliu Bankas 0.71 -2.7% 103559 2.9 0.4

Snaige 0.34 47.8% 660023 -0.4 0.1

Snoras 0.53 0.0% 315850 0.7 0.2

TEO LT 1.30 1.6% 4713529 6.4 6.6 0.9 1.0

Ukio Bankas 0.67 1.5% 366772 0.8 0.3

Source: Reuters, Swedbank

P/E P/BV

P/E P/BV

Lithuania ( in LTL)

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Change

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P/E P/BV

Estonia (in )

Last

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Change

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Volume

Latvi a (in LVL)

Last

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Change

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Volume

Equity Weekly

Index value Weekly Change,% Weekly Turnover

Estonia 289.5 4.17% 4.4m

Most of the shares ended last week in green. Estonian Telekom, Merko andTallink were most actively traded. In Estonian Telekom one bigger sellerfinished selling, in Merko also one bigger seller was on the market. Tallinkgained nicely as several bigger buyers were present.

Latvia 227.3 1.6% 0.3m

Market remained rather calm in the most of names. Some activity was seen inGrindeks where 54thousand shares were traded, most of turnover came fromtwo block trades. Share closed week by 1.20% higher to LVL 2.53. The Companyalso informed about 1Q results which was broadly in line with expectations anddidnt leave any significant impact on share price.

Lithuania 163.6 0.92% 2.6m

Some positive sentiment was seen on the VSE: last week the OMXV index wentup by 0.92%. Weekly turnover comprised 2.64m: 2/3 of it came into TEO LTshares, which gained 1.56% WoW to LTL 1.30. The biggest loser on the marketwas Invalda: shares lost 21.4% of value WoW and were traded for 169.5thousands. Apranga shares went up by 8.61% and turnover was 144thousands.

Equity Research - Monday, May 11, 2009


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Equity Weekly 11 May 2009


Baltika published its sales figures on last Monday. Total sales declined 21% YoY andamounted to 4.9m in April. The highest drop in turnover was recorded in wholesales whichfell 70% YoY to 0.23m. The retail sales amounted to 4.6m in April 2009, down from

5.4m in April 2008.

Arco Vara informed the shareholders that the Tallinn Administrative Court annulled thedecision of Tallinn City Council with what detailed plan of Narva street 67 in Tallinn, Estonia(project Tivoli) was established. A private person living in a flat nearby the Tivoli project hascontested the resolution, arguing that 780 parking lots in the approved detailed plan is not

in accordance with Tallinn Parking Development Plan for years 2006-2014, according tothe number of parking lots in Tivoli project should be 907. In addition, the complainant hasestimated, that administrative act, which determined the detailed plan, has lack ofmotivation over matters of facts why changes in master plan has been needed and why theneed of environmental impact assessment has not been considered. Arco Vara is involvedin the process as a third person. Arco Vara considers to be reasonable to file an appeal.

Harju Elekter (HAE) published its Q1 2009 results last week. HAEs sales in themanufacturing segment were 10.4m, down 7.8% YoY. Sales in the real estate segmentgrew 6.8% YoY to 0.6m in Q1 2009. In total, HAEs turnover for the first three monthsreached 11.6m, down from 13.0m in the same period a year ago. The net profitamounted to 0.17m in Q1 which were below our estimates. We downgraded our TP to

2.01 but reiterated BUY recommendation.

On Friday after market closed Ekspress Grupp published its Q1 2009 results. The total

revenue for the Group declined by 17.8% YoY amounting to 16.9m in Q1 2009. The netloss reached 1.1m in the reported period. We will publish the quick comment on resultslater today.

Tallink posted passenger and cargo volumes for April 2009. Total passenger volumeincreased by 25.3% YoY. Strong growth was seen on key routes between Finland-Swedenand Finland-Estonia. Cargo units were down 33% YoY as a result of significant drop in bothexports and imports volumes. Company has been able to attract more passengers withcars though, somewhat off-setting the drop in cargo segment.

Latvia

Grindeks - reported 1Q 2009 results were broadly in line with our expectations. Sales were

LVL14.1m (-16.7% YoY), EBITDA was LVL2.3m (-55.2% YoY) and net profit was LVL1.2m(-64.7% YoY). This was an anticipated drop as the company had significant one-off sales ofhigh-margin products in 1Q 2008, due to start of cooperation with Pharmstandart onexclusive promotion and distribution of Mildronate in Russia and necessary stock waspurchased. 2Q 2009 results will tell if there will be a material effect from the productionerror by Soteks in Russia.

Lithuania

The consolidated non-audited net profit ofUkio Bankas group in 1Q 2009 amounts to LTL5.5m (1.6m), or 70.11% lower than a year ago. The bank recorded unconsolidated non-audited net profit of LTL 4m (1.2m), down by 75.16% year-on-year.

On 8 May 2009 Ukio Bankas Statute with increased authorized share capital has beenregistered with the Register of legal entities. After increase the Bank's authorized sharecapital amounts to LTL 245 824 000 (71.2m). The shares of the new LTL 49 116 000issue will be transferred to the securities accounts of shareholders of Ukio bankas inproportion to the nominal value of shares held by proprietary right at the end of the rightsaccounting day (i.e. 10 April 2009) of the general meeting of shareholders, held on 27March.

According to preliminary data, in 1Q 2009 DnB NORD Bankas earned net income of104.4m (30.2m), i.e. up by 9.3 % year-on-year, and operating expenses fell 6.2% year-on-year to LTL 42.6m (12.3m). The cost income ratio improved further to 39.4% in the 1Q2009 compared to 47.4 % in the same period a year ago. In 1Q 2009, DnB NORD Bankasearned a pre-tax operating profit before provisions of LTL 57.7m (16.7m), a rise of 23.03%YoY. The bank made LTL 106m (30.7m) in provisions. As a result the bank recorded LTL

48.3m (14m) loss, in comparison to net profit of LTL 37.6m (10.9m) a year ago.


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In April, Klaipedos Nafta transshipped 438 thousands tons of oil products, 40.67% lessthan a year ago. Preliminary earnings decreased by 35.24% year-on-year to LTL 6.8m(2m). The transshipment results for the 4 months of 2009 dropped by 18.64% YoY andamounts to 2.39m tons of oil products. Preliminary earnings were LTL 36.1m (10.4m), adecrease of 15.26% YoY.

Starting the 4 May Snaige is back to the normal 5 days a week work schedule.

In April 2009, the consolidated non-audited sales of dairy manufacturer Rokiskio Suris

made LTL 52.141m (15.1m), i.e. up by 5.16 % YoY. The sales increased due to the EUintervention purchase. During 4 months in 2009, the preliminary consolidated non-auditedsales made LTL 178.36m (51.66m), i.e. down by 5.34 % compared to the same period in2008.

During the 1Q 2009 Zemaitijos Pienas non-audited consolidated sales revenue amountedto LTL 90.25m (26.14m) and this is 20.42 % less than a year ago. Non-auditedconsolidated loss reached LTL 3.6m (1.04m), which is a 33.34% better result than a yearago.

In April 2009, the retail turnover (including VAT) of apparel retailer Apranga made LTL30.9m (8.9m), and decreased by 20.9% YoY: a decline of 22% YoY in Lithuania, a drop of22.8% in Latvia, and 6.6% in Estonia. During 4 months of 2009 the retail turnover (includingVAT) has made LTL 124.8m (36.1m), and has lowered by 22.3% year-on-year. CurrentlyApranga operates 118 stores in the Baltic States: 78 in Lithuania, 31 in Latvia, and 9 inEstonia.


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Investor Calendar:

Estonia

12.05.2009 NRM - Annual General Meeting

14.05.2009 NCN - Annual General Meeting

11.-15.05.2009 NCN - Interim Report Q1 2009

Latvia

11.-15.05.2009 ELG - 3M non-audited financial report

Lithuania

12.05.2009 LNS1L - Repeated Annual General Meeting

15.05.2009 PTR1L - Repeated Annual General Meeting

15.05.2009 LFO1L - sales revenue in April 2009

15.05.2009 VBL1L - sales revenue in 3M 2009; consolidated financial s tatement for Q1 2009

Source: NASDAQ OMX


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Swedbank Markets Baltic Equity research & Institutional sales:

Energy, Materials & Utilities Industrials Equity Sales

Pavel [email protected]

Estonia+372 6 131 535

Risto [email protected]

Estonia+372 6 136 796

Kristiina [email protected]

Baltic Institutional Sales+372 6 131 663

Donatas [email protected]

Lithuania+370 5 268 4395

Marko [email protected]

Estonia+372 6 131 246

Andres [email protected]

Head of Sales (Estonia)+372 6 131 657

Telecom Services FinancialsSvetlana [email protected]

Head of Sales (Latvia)+371 6744 4154


Estonia+372 6 131 246

Risto [email protected]

Estonia+372 6 136 796

Simona [email protected]

Head of Sales (Lithuania)+370 5268 4513

Neringa [email protected]

Lithuania+370 5 268 4733


Estonia+372 6 131 246 Equity Trading

Consumers HealthcareSimmo [email protected]

Head of Baltic Trading+372 6131 605

Pavel [email protected]

Estonia+372 6 131 535


Latvia+372 6 131 246 Equity Capital Markets

Neringa [email protected]

Lithuania+370 5 268 4733

Lauri [email protected]

Head of Baltic Equity Capital Markets+372 6 131 355

Donatas [email protected]

Lithuania+370 5 268 4395

Mihkel [email protected]

Baltic Equity Capital Markets+372 6 131 564

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

Background Information:

Recommendation structureSwedbank 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 appreciationand dividend yield combined.

The recommendations for the securities mentioned in this report are based on risk and return considerations. The higher the risk category ofthe investment, the higher the required return. For equity investments, returns are defined as capital appreciation and dividends received overthe investment horizon of 12 months forward. The expected capital appreciation is the ratio of a stocks target price over the current price. Acompany risk rating depends on its stock price volatility, liquidity and business outlook. The target price depends on a companysfundamentals as well as the market valuation of peer stocks, and can be changed at any time if the relevant changes occur within acompany/market perception of the peer group. Buy, accumulate, hold, reduce, sell and avoid recommendations may be used in thisreport. The table below presents the relationship between recommendations and target prices compared to risk level of the stock. These areindicative ranges and actual recommendations may deviate from the indications if other relevant issues are considered. For more detailedinformation 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 securi ty does not match the standards presented in SWBs investment guidel ines

The recommendation by Swedbank Markets Equity Research department is based on a variety of standard valuation models. However, thebase for the calculation of the target price is our DCF model (DCF = discounted cash flow) with the exception of financial and investmentcompanies. 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 andcomparative 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 orinternational) 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 ratioswhen available. Break-up valuation models are also sometimes considered.

Recommendations by the 11 May 2009

No of shares Part of total

Buy 9 41%

Under Review 13 59%

Buy

41%

Under

Review

59%


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Information to the customer:

General

Equity weekly is a compilation of news, corporate events,companies results and other similar information published in stockexchange notifications last week, an overview of Baltic stockexchanges of the same period and a weekly timeline of upcomingcorporate events of listed companies. No research is made here,

any resemblances to research are purely coincidental and shouldbe considered unintentional. Weekly may contain references toeffective price targets and investment recommendations ofcompanies mentioned in previously published research reportsand may update such price targets and recommendations on thebasis of important new information. Previous research reports areavailable athttps://www.swedbank.ee/private/investor/portfolio/analysis/equityInformation on how the price targets and investmentrecommendations are constructed in research reports is availableat http://www.swedbank.ee/disclaimers/recommendation2007.pdf.

Issuer and recipientsThis equity weekly is prepared by : Swedbank AS in Estonia -registered address Liivalaia 8, Tallinn, 15040, regulated byFinancial Supervision Authority;

Swedbank, AB in Lithuania - registered address Savanoriu 19,Vilnius, LT-03502, regulated by the Securities Commission of theRepublic of Lithuania;and disseminated also by: Swedbank AS in Latvia - registeredaddress Balasta dambis 1a, Riga, LV-1048, regulated by theFinancial and Capital Markets Commission of the Republic ofLatvia;who are all members of Swedbank Baltic Banking (hereinafterSwedbank).Equity weekly is issued by Swedbank Markets, a business unit ofSwedbank. This equity weekly is produced for Swedbank clients.Swedbank is not advising or soliciting any action upon this weeklyand it is not, and should not be construed as, an offer orsolicitation of an offer to buy or sell any securities

Analysts certification

The analyst(s) responsible for the content of this weekly herebyconfirm that notwithstanding the existence of any potential conflictsof interest referred to herein, the views expressed in this weeklyaccurately reflect our personal views about the companies andsecurities covered. The analyst(s) further confirm not to havebeen, nor are or will be, receiving direct or indirect compensationin exchange for expressing any of the views or the specificrecommendation contained in the weekly.

Limitation of liabilityAll information, including statements of fact, contained in thisequity weekly have been obtained and compiled in good faith fromsources believed to be reliable. However, no representation orwarranty, express or implied, is made by Swedbank with respect tothe completeness or accuracy of its contents, and it is not to berelied upon as authoritative and should not be taken in substitutionfor the exercise of reasoned, independent judgment by you.Swedbank would like to point out that recipients of the weeklyshould note that investments in capital markets e.g. such as in thisdocument carry economic risks and statements regarding futureassessments are compounded with uncertainty. The recipientsand clients of Swedbank are responsible for such risks and theyare recommended to supplement their decision-makinginformation with that material which is assessed to be necessary,

including but not limited to knowledge on the financial instrumentsin question and on the prevailing requirements as regards tradingin financial instruments. Opinions contained in the weeklyrepresent the analyst's present opinion only and may be subject tochange.To the extent permitted by applicable law, no liability whatsoever isaccepted by Swedbank for any direct, indirect or consequentialloss arising from the use of this weekly.

Conflicts of interestAll equity weeklies are produced by Swedbank Markets Researchdepartment, which is separated from the rest of its activities by aChinese wall; as such, equity weeklies are independent and basedsolely on publicly available information. The analysts at SwedbankMarkets may not own securities covered by the weekly, thatrepresent more than 5% of the total share capital or voting rights ofany company mentioned in this weekly.Internal guidelines are implemented in order to ensure the integrityand independence of research analysts. The guidelines includerules regarding, but not limited to, the identification, managementand avoidance of conflicts of interest.The remuneration of staff within the Research department mayinclude discretionary awards based on Swedbanks total earnings,including investment banking income; staff, however, shall notreceive remuneration based upon specific investment bankingtransactions.Swedbank shall not receive compensation from any companymentioned in the weekly for making an investmentrecommendation or enter into an agreement with the saidcompany to make an investment recommendation.

Company specific disclosures and potential conflicts ofinterestIn view of Swedbanks position in its markets, recipients of thisweekly should assume that it may currently (or may in the comingthree months and beyond) be providing or seeking to provideconfidential investment banking services to the companies referredto in this weekly and that an agreement regarding such servicesmay have been in effect over the previous 12 months, under whichSwedbank may have received payments.Recipients of this weekly should also note that it may happen thatSwedbank, its directors, its employees or its subsidiary companies

at various times have had, or have sought, positions, advisoryassignments in connection with corporate finance transactions,investment or merchant banking assignments and/or lending asregards companies and/or financial instruments covered by thisweekly. It may also occur that Swedbank may act as a liquidityprovider in trading with financial instruments covered by thisweekly.Swedbank has not been lead manager or co-lead manager overthe previous 12 months of any publicly disclosed offer of financialinstruments of any company mentioned in this weekly.

Reproduction and disseminationThis material may not be reproduced without permission fromSwedbank Markets. The weekly may not be disseminated tophysical or legal person who are citizens of, or have domicile in acountry in which dissemination is not permitted according to

applicable legislation or other decisions.Information contained in this weekly is confidential and is intendedto be used solely by the clients of Swedbank to whom this weeklywas addressed. By accepting this weekly you have accepted thedeclared restrictions.

Swedbank Group, 2009, All rights reserved.

The Swedbank does not have shareholdings exceeding 5 % in companies referred to in this report, but it may hold securities mentioned in thisreport on behalf of its clients, acting in custodial capacity. Companies mentioned in this report do not have shareholdings exceeding 5% inSwedbank. For information regarding the Bank and its internal organizational and administrative arrangements for the prevention and avoidanceof conflicts of interest, refer to the following websites:

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swb19equityweekly11.05.2009

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