1. BVB Company Results - H 1 / 2011
August 17,2011
BVB Company Results in 2011
H 1 / 2011 - Part IV
Mixed results in H1/2011 for companies analyzed in this research
Most companies (except for FP and SIF1) analyzed in this research have shown an upturn in
sales throughout the past 12 months. Nonetheless, only five can also boast about a spike in
profitability in the previous four quarters (ATB, FP, SIF3, SIF4 si SIF5). To further complicate
things, not all companies that posted an upswing in profit are on an upward trend.
For 2011, uncertainty prevails over both Romania’s and the global economy. On a global
scale, the debt crisis arisen in the European Union and the United States of America is a ma-
jor destabilizing factor, while the main emergent economies (China, Brazil and India) face
the danger of overheating. On a national scale, Romania, although it has recently received
satisfactory appraisals from the International Monetary Fund and the World Bank in relation
to the measures implemented by the government to restore macro stability, faces difficul-
ties while striving to overcome the recession, stagflation risks gaining ground against a back-
drop of a steady ramp-up in prices. Under such circumstances, although most companies
could face the pressure of market factors, issuers with a solid balance sheet structure and a
relatively stable consumer database might keep achieving good financials.
Content
Antibiotice S.A. Iasi ...................................................................................................... 2
Biofarm S.A. Bucharest ................................................................................................. 2
Concefa S.A. Sibiu ........................................................................................................ 3
Fondul Proprietatea S.A. Bucharest .............................................................................. 3
S.I.F. Banat Crisana S.A. Arad ....................................................................................... 4
S.I.F. Transilvania S.A. Brasov ....................................................................................... 4
S.I.F. Muntenia S.A. Bucharest ..................................................................................... 5
S.I.F. Oltenia S.A. Craiova ............................................................................................. 5
S.N.T.G.N. Transgaz S.A. Medias ................................................................................... 6
Addendum ................................................................................................................... 7
1

2. BVB Company Results - H 1 / 2011
August 17,2011
Antibiotice S.A. Iasi (ATB)
Ticker Symbol ATB Antibiotice S.A. Iasi (ATB) drug producer posted good half-year results, displaying an up-
Price* 0.4379
surge in sales and profit. Although in H1 sales climbed 19.63% and net result marked an
almost twofold increase set against H1/2010, the news isn’t all that good. The spike in
Capitalization (mil. ron) 209.17 profitability was generated by financial profit, while the operating margin deteriorated to
YoY Change (%) 1.25 such an extent that the operating profit adjusted for inventories fell by some 19.57%.
However, taking into account that by the end of H1’2011 ATB had achieved less over 50%
YTD Change (%) -16.01
of the figure budgeted for 2011 and approximately 88% of the profit target we opine that
Change set against BET
-5.29 there are good chances for both objectives to be met by the end of 2011.
YTD (%)
* closing price valid on 16.8.2011 According to the sector rotation hypothesis, the best time to invest in pharmaceutical
Source: Tradeville Startrade 2.0 stocks is the peak of the economic expansion when, relative to other sectors, such shares
are usually undervalued.
Like in 2010, Antibiotice did not pay dividends. Compared to the European sector wherein
it belongs, ATB seems undervalued by 47% - 84% from the viewpoint of all three multiples
employed. As during times of economic uncertainty companies in the pharmaceutical sec-
tor tend to have a better performance than the average, we believe that Antibiotice
shares show a significant growth potential but investors’ should pay particular attention to
the risks entailed by a decline in the abovementioned operating margin.
Biofarm S.A. Bucuresti (BIO)
Ticker Symbol BIO From the half-year financials recently made public by Biofarm S.A. Bucuresti (BIO), one of
Price* 0.1945
the largest drug producers in Romania, we notice a problem arisen in the case of Antibi-
otice S.A. as well: the spike in the half-year profit is determined by the favourable financial
Capitalization (mil. 212.95 result, while operating profit is shrinking (although by a mere 2.46%) despite rising sales.
Although operating margin dropped significantly less set against ATB, the much smaller
YoY Change (%) 2.91
profit reaped in H2/2010 compared to H2/2009 leads to 27.5% downturn in net result
YTD Change (%) -5.12 throughout 1.07.10 – 30.06.11 set against the previous 12 months. There are still chances
Change set against BET for 2011 sales and profit targets to be attained considering that H1’2011 sales account for
5.60
YTD (%)
over 53% of the budget, while BIO had achieved over 70% of budgeted profit by
* closing price valid on 16.8.2011
30.06.2011.
Source: Tradeville Startrade 2.0;
According to the sector rotation theory, the optimum time to invest in shares belonging to
the pharmaceutical sector is the peak of the economic expansion, when these tend to be
undervalued. Opposite to previous years, in 2011 Biofarm paid a dividend of 0.0055 RON/
share, equivalent to a return of 2.65%. Relative to comparable European companies, BIO
seems undervalued based on the P/E and P/S multiples (by around 76% and 53% respec-
tively), however, it shows a slight overvaluation relative to the P/BV multiple (0.97%). Con-
sidering that its margins exceed those of ATB and during times of economic ambiguity the
pharmaceutical sector tends to have a good economic performance, we believe that Bio-
farm shares deserve investors’ attention.
2

3. BVB Company Results - H 1 / 2011
August 17,2011
Concefa S.A. Sibiu (COFI)
Ticker Symbol COFI Prior to this research we thought that the construction company Concefa S.A. Sibiu (COFI)
Price* 0.0755
was the best investment in its sector. Unfortunately, H1 results indicate a deterioration in
its financial performance against a backdrop of a decline in sales together with rising in-
Capitalization (mil. RON) 42.92 ventory and a sharp reduction in operating efficiency which led to operating losses. This
YoY Change (%) -52.81 turnabout along with the fact that sales cover only 14.9% of 2011 budget lead to the con-
clusion that the issuer will most likely miss its sales and profit target.
YTD Change (%) -46.07
Change set against BET According to the sector rotation hypothesis, the best time to invest in shares belonging to
-35.35
YTD (%) the real estate and construction sector is towards the end of the recession. In Romania,
* closing price valid on 16.8.2011 the situation is tangled up by the fact that prices in the real estate sector continue to be
Source: Tradeville Startrade 2.0 perceived as overvalued.
Dividend yield is zero because the issuer hasn’t paid dividends. Set against the European
sector wherein it belongs, Concefa seems overvalued from the viewpoint of the P/S and P/
BV multiples, their values being 92% and 59% respectively lower than the sector values
obtained through the BVB vs. Europe report. However, any investment in COFI shares
should consider both the return and the quality of corporate governance.
Fondul Proprietatea S.A. Bucuresti (FP)
Current revenues mounted to almost Lei 600 mil during the first six months of the year, by
Ticker Symbol FP
121.7% above the level of H1 2010 and 98.3% above the initially budgeted level. The main
Price* 0.4699
contribution to achieving current revenues was brought by dividend income, the first 20
Capitalization (mil. 6474.47 companies in the portfolio contributing with Lei 474.5 mil or 92% of total dividends as fol-
lows: SNP (Lei 201.5 mil), Hidroelectrica (Lei 52.5 mil), Romgaz (Lei 106 mil), Transgaz (Lei
YoY Change (%) -27.65
50.8 mil), Enel Distributie Banat (Lei 20.2 mil).
YTD Change (%) -27.65
According to the Revenue and Expense Statement for 2011, managers forecast current
Change set against BET
-16.93 expenses of Lei 92.3 mil for 2011. Considering the above-displayed data, we believe that
YTD (%)
FP has good chances of reaping net profit of at least Lei 500 mil, which, taking into account
* closing price valid on 16.8.2011
Source: Tradeville Startrade 2.0; the current stock price, would produce a dividend yield of 7.34%. The dividend policy
adopted by Franklin Templeton estimates, in the absence of some exceptional market cir-
cumstances, paying 100% of allocable profit as dividends.
If shareholders agree with the proposal of Franklin Templeton to list FP shares on the War-
saw Stock Exchange, the time frame estimated by the manager for listing is the first half of
2012. Among reasons why Franklin Templeton chose Warsaw to the detriment of bourses
such as the London Stock Exchange we mention: lower costs, due to its capitalization FP
might enter top 15 companies and subsequently in the composition of the WIG index thus
catching the attention of institutional investors that build their stock portfolios based on
the composition of certain indices.
On June 30, 2011, liquid assets accounted for a mere 2.93% of the total asset (current ac-
counts, bank deposits and government bonds).
3

4. BVB Company Results - H 1 / 2011
August 17,2011
S.I.F. Banat Crisana S.A. Arad (SIF1)
Ticker Symbol SIF1
During the first six months of the year, SIF1 reaped total revenues of Lei 43 mil, down by
Price* 0.7935 28% set against H1 2010 but up by 5.8% compared to the level estimated in the Revenue
and Expense statement. Dividend income added up Lei 12.15 mil (set against the initially
Capitalization (mil. 435.51
estimated level of Lei 9.5 mil), while revenues from ceded financial assets totaled a mere
YoY Change (%) -29.78 Lei 19.3 mil set against Lei 25.5 mil as it was estimated at the beginning of the year. If the
current market circumstances remain unchanged in H2 2011 as well, SIF1’s profitability
YTD Change (%) -21.75
will suffer as the company intends to sell financial assets of Lei 32.1 mil plus the remaining
Change set against BET
-11.02 Lei 6.2 mil from H1. Under such circumstances we can question achieving the Lei 26.9 mil
YTD (%)
profit target and total revenues of Lei 73.8 mil. The financial sector accounts for almost
* closing price valid on 16.8.2011
Source: Tradeville Startrade 2.0 60% of SIF1’s net asset, however, the company plans to consolidate the positions held in
other sectors such as: energy, raw materials, utilities and pharmaceuticals. Another pro-
ject aims building a portfolio focused on European companies whose performance tops
the average return of the main European indices.
SIF1 is undervalued set against the European sector of investment funds based on the P/
BV multiple and overvalued considering P/E. Nonetheless, under the current circum-
stances dominated by volatility, the risks of an investment in SIF1 are amplified by the low
exposure on fixed-income securities (only 7.56% on July 31, 2011), as well as by the great
exposure on the banking sector (almost 60%), reason why SIF1’s weight in investors’ port-
folios should be well pondered about. Dividend yield corresponding to 2011 net profit is
estimated to range between 2.3% and 4.2%.
S.I.F. Transilvania S.A. Brasov (SIF3)
Ticker Symbol SIF3 In the first two quarters of the year SIF Transilvania exceeded current revenues and net
profit estimated for the entire 2011. This was due to the larger volume of ceded financial
Price* 0.4230
assets, reason why we believe that the company can outdo the net profit target estab-
Capitalization (mil. 461.98 lished for 2011 (82 mil; +22.5% y/y). Throughout the first six months, SIF3 contributed to
the share capital increase of some portfolio companies in the tourism sector (27.74% of
YoY Change (%) -25.13
investments), while the rest of 68.06 mil accounted for acquisitions on the domestic capi-
YTD Change (%) -22.17 tal market. The issuer sold part of the stakes held in BRD, FP, OLT, EBS, ATB, COTE, OIL and
Change set against BET Agrocomplex collecting Lei 90.64 mil.
-11.45
YTD (%)
* closing price valid on 16.8.2011 Alongside SIF2, SIF Transilvania is the company with the highest payroll expenses after the
Source: Tradeville Startrade 2.0; first six months of the year. Thus, the ratio between payroll expenses and the net asset
stands at 0.73%, while for SIF1 it stands at 1.01%. SIF3 holds important stakes in: BCR
(19.48%), Turism Felix (3.79%), Turism, Hoteluri, Restaurante Marea Neagra (3.97%), Ori-
zont Turism (2.52%), OMV Petrom (2.40%), Erste Bank (1.06%), COMCM Constanta
(2.71%) and BRD (26.83%). Exposure on the banking sector slightly surpasses 45% of net
asset, the tourism sector holding 23%, while fixed-income securities (bank deposits and
corporate bonds) hold a weight of 4.98% in the issuer’s net asset. SIF3 is undervalued set
against the European average of investment funds based on the P/E and P/BV multiples
(source: BVB vs. Europe report available on Startrade 2.0 platform).
4

5. BVB Company Results - H 1 / 2011
August 17,2011
S.I.F. Muntenia S.A. Bucuresti (SIF4)
Ticker Symbol SIF4 In H1’2011, SIF Muntenia suffered a 30% decline in current revenues set against H1 2010.
Price* 0.5280
Furthermore, net profit plunged by 71.4%, while the net asset lost 2.97% due to narrowing
the sub-portfolio of unlisted shares, corporate bonds, fund units, government bonds and
Capitalization (mil. 426.12 bank deposits. We believe that the 2011 budget that entails amassing gross profit of Lei 65
mil (-23.25% y/y) can be achieved.
YoY Change (%) C
YTD Change (%) -18.01 The weight of listed shares in the relevant portfolio surged to 62.2% set against 57.8% at
Change set against BET the end of 2010. Similar to the other financial investment companies, SIF4 is mainly ex-
-7.29
YTD (%) posed on the banking sector (60.12%). On 30.06.2011, the other sectors had the following
* closing price valid on 16.8.2011 weight in the issuer’s portfolio: commerce, tourism and restaurants (8.89%), building ma-
Source: Tradeville Startrade 2.0 terials sector (5.87%), agriculture (4.31%), metal construction and metal products industry
(4.06%).
In H1’2011, SIF4 bought shares in TLV (Lei 1.8 mil), COTE (Lei 1.09 mil), FP (Lei 13.68 mil)
and sold part of the stakes controlled in BRD, COTE, FP, PRSN and OMV Petrom, reaping
profit of Lei 2.26 mil given a total transaction value of Lei 4.43 mil.
SIF4 is undervalued set against the European sector of investment funds grounded on the
P/BV multiple and overvalued if we consider the P/E multiple (source: BVB vs. Europe re-
search, Startrade 2.0 platform).
S.I.F. Oltenia S.A. Craiova (SIF5)
Ticker Symbol SIF5 Like the other three financial investment companies (except for SIF Transilvania), SIF5 re-
Price* 1.0350
corded a steady decline in current revenues (-46.75%) and net profit (-43%) in the first six
months of the year set against H1 2010. Considering that in H1 2011, SIF5 attained only
Capitalization (mil. 600.47 21% of total budgeted revenues, we believe there are poor chances for the issuer to fully
meet its profit target, although SIF5 managers forecast a leap in stock prices in the second
YoY Change (%) -26.07
part of the year, which would allow the intensification of the disinvestment activity.
YTD Change (%) -17.86
Change set against BET SIF5 bought shares amounting to Lei 47.8 mil in Argus Constanta (UARG), Biofarm (BIO),
-7.13
YTD (%) Prodplast Imobiliare (PPLI), Transelectrica (TEL), Banca Transilvania (TLV), OMV Petrom
* closing price valid on 16.8.2011 (SNP) and Electromagnetica Bucuresti (ELMA) and sold packages of Alro (ALR) and Oltchim
Source: Tradeville Startrade 2.0; (OLT) shares. According to the BVB vs. Europe table, SIF5 is undervalued compared to the
European sector of investment funds if we consider the P/BV multiple and overvalued
based on the P/E multiple.
On July 31, 2011, NAV climbed 7.5% compared to December 31, 2010. The most important
four companies included in SIF5’s portfolio are: BRD (32.66%), BCR (17.32%), OMV Petrom
(12.78%) and TLV (5.50%). Investments in fixed-income securities (RON and foreign cur-
rency-denominated transactions) account for 7.98% of net asset. On September 22/23 the
issuer convoked the Board of Directors to request BCR and its majority shareholder to ini-
tiate procedures for BCR’s listing on the Bucharest Stock Exchange.
5

6. BVB Company Results - H 1 / 2011
August 17,2011
S.N.T.G.N. Transgaz S.A. Medias (TGN)
Ticker Symbol TGN In H1 2011, TGN’s net profit shrank, although sales advanced by 3.2%. If the operating
Price* 185.5000
result shows that the company’s activity performed at a pace similar to last year’s , the –
5.07 mil negative financial result explains the profit drop.
Capitalization (mil. 2184.05
Compared to the European utilities sector TGN is undervalued if we consider the P/E and
YoY Change (%) -23.03 P/BV multiples and overvalued based on the P/S multiple. TGN is traded at 6 times the net
YTD Change (%) -33.75 profit throughout the past 12 months.
Change set against BET
-23.03 As for the 2011 revenue and expense statement, its comparison with the 2010 revised
YTD (%)
revenue and expense statement draws attention to several aspects: conservative ap-
* closing price valid on 16.8.2011
Source Tradeville Startrade 2.0 proach regarding operating revenues (-10.88% y/y) and 40% spike (Lei 78 mil) in expenses
related to foreign works, 7.8% higher payroll expenses (+23.2 mil lei), as well as the Lei
12.1 mil financial loss. Based on good operating results reaped in the first half of the year,
we believe that the Lei 123 mil profit estimate for the end of the year is rather unrealistic
and that TGN is highly likely to end 2010 with a profit at least equal to the current level
(Lei 255 mil).
Under such circumstances, dividend yield at a payout ratio of 50% - stands at 5.85%. Al-
though in 2010 TGN paid 90% of net profit to shareholders, this year the Ministry of Econ-
omy initially voted against allotting 90% of profit as dividends, justifying its decision by
TGN’s financing requirement for the Nabucco project. Furthermore, TGN managers esti-
mate that in 2011 and in the upcoming years the company will resume dividend payments
in compliance with legal regulations applicable prior to the Romanian government’s tem-
porary measure to lift it to 90% as part of the national fiscal consolidation strategy.
6

7. BVB Company Results - H 1 / 2011
August 17,2011
Financial ratios for analyzed companies
The below table synthesizes calculations made based on the results of companies analyzed herein, including H1’ 2011 financials.
The information regarding the net profit of ATB, BIO and COFI has been adjusted. The adjustment refers to eliminating the effects of re-
cording the inventory turnover (we’ve practically diminished profit when the company had inventory and lifted it when it sold more than the
interval’s production).
Financials are posted in RON mil.
* in RON mil for Romanian companies and in EUR mil for companies in the eurozone, cumulated throughout the 12 months that precede
the end of the reporting period.
** computed using the dividend paid throughout the current year (if applicable) and the closing price prior to the ex-dividend date.
7

8. BVB Company Results - H 1 / 2011
YoY Change= price change set against pre- Change set against BET YTD = Stock YTD P/E = price / net profit per share ;
vious year’s value; Change — BET Index YTD Change P/BV = price / book value;
YTD Change=price change set against the Leverage (%) = total debts / P/S = price /sales per share;
value valid at the end of the previous year; / total asset * 100; Dy(%) = dividend yield
in RON mil for companies in Romania and in EUR mil for companies in the eurozone, cumulated over the past 12 months that precede
the end of the reporting period
** computed using the dividend paid in the current year (if applicable) and the closing price valid prior to the ex-dividend date
Magda Sirghe Tradeville Services:
magda.sirghe@tradeville.eu
Startrade RO
Dragos Darabut
dragos.darabut@tradeville.eu Online trading of any stock/bond listed on the Bucharest Stock Exchange
Ovidiu-George Dumitrescu, CFA
ovidiu.dumitrescu@tradeville.eu
Smart
Line of credit intended for investments in stocks traded on BSE
Derivgate
Trade futures and options on the Sibiu Monetary Financial and Commodities Exchange and
the Bucharest Stock Exchange
SSIF Tradeville S.A. Startrade BG
Online trading of over 50 major ticker symbols listed on the Sofia Stock Exchange
Address: Unirii Blvd No. 19, Bl. 4B,
ground floor, Sector 5,
Startrade AT
Bucharest.
Zip code: 040103.
Online trading of over 150 stocks listed on the Vienna Stock Exchange
Romania
Telephone: 0040 21 336 93 25 Startrade 360
0040 21 336 93 26
17 international markets, over 2000 financial instruments, 24h/day online access, margin
Facsimile:0040 21 336 92 33 trading from 1%
Tradeville is the new Vanguard level. Our brokerage house underwent this transformation after 14 years of expertise in financial markets, technological innova-
tion, transparency and after being constantly in touch with our clients, thus managing to achieve the leadership position in on-line trading in Romania. An inte-
grated trading platform and regional expansion in Eastern Europe represents the offer made by Tradeville to investors. You can access our website using the
www.tradeville.eu or www.vanguard.ro links.
SSIF Tradeville SA is authorized by the Romanian National Securities Commission Decision No. 398/15.02.2005
The content of this research belongs to Tradeville and it is protected by the applicable copyrights, trademarks and all other intellectual property rights. It is forbid-
den to republish or re-distribute it without the prior written consent of Tradeville. The reproduction, retransmission, storage, transfer, public disclosure, rental or
any such use of this content without Tradeville or the author’s prior written consent represents an infringement of the applicable copyrights and shall be punished
in compliance with the applicable law.
SSIF Tradeville SA does not provide investment advice or recommendations. The research reports released by the company are informative materials comprising
of utterly objective information about financial markets, issuers and market sectors. Our company disclaims all responsibility for transactions carried out based on
said Research Reports. SSIF Tradeville SA does not have any particular interest and it is not involved (the company, relevant individuals within the company or
any other involved person) in a conflict of interest with the issuers mentioned in our Research Reports. SSIF Tradeville SA developed and implemented an Internal
Procedure to avoid and handle conflicts of interest: if a conflict of interest cannot be avoided, it will be made public on the release date of the Research Report at
the latest. The information used in our research reports is gathered from sources considered to be trustworthy, nonetheless, there is no guarantee regarding the
accuracy of said information. The investment in financial instruments entails peculiar risks including but not confining to: market price fluctuation, dividend, return
and/ or profit uncertainty, exchange rate fluctuation. Furthermore, the past performance of financial instruments is not a guarantee of a similar future perform-
ance.
8