The Bulgarian Stock Exchange (BSE) seems to be slowly regaining the interest of investors as bank deposit rates remain close to historic lows. In addition, according to data from the National Statistical Institute, the average income per household member in Bulgaria rose by an annual 9.4% to 1,431 levs in the third quarter of 2017, which prompted a fresh flow of investment to the Sofia bourse.
The BSE's blue-chip SOFIX index recorded a rise of 18.16% to 665.03 points in the 12 months ended November 30, 2017. The wider BGBX40 index, which tracks the performance of the 40 most traded companies on the BSE, rose by 22.68% to 130.49 points during the period November 30, 2016 - November 30, 2017. A total of 29 of the constituents of the BGBX40 posted double-digit growth during the review period, with the top gainer - Doverie United Holding, recording an increase of 128.49%.
Among the main growth drivers during the period were improved macroeconomic fundamentals, strong corporate financial performance, as well as increased speculation related to possible mergers and acquisitions regarding BGBX40 constituents.
Following is a ranking of the 10 best performers among the most traded stocks on the BSE during the period under review.
1. Doverie United Holding +128.49% to 2.045 levs
Doverie United Holding advanced the most among the BGBX40 constituents, as its share price added a whopping 128.49% to 2.045 levs in the 12 months to end-November.
The price was strongly influenced by speculation on the intention of Bulgarian drug maker Sopharma to further increase its stake in the diversified holding. Sopharma increased its shareholding interest to over 25% by acquiring 1.16 million Doverie United Holding shares representing a 6.2% stake in December 2016.
In February 2017, Sopharma filed for regulatory approval to further increase its stake to over 50%. However, the company has not followed up on its announced intention by the time of writing of this article.
The share price got an additional boost from the inclusion of Doverie United Holding in the SOFIX as part of a revision of the composition of the index in September.
2. Aktiv Properties REIT +115.3% to 5.77 levs
With a closing price of 5.77 levs on November 30, 2017, the shares of Aktiv Properties Real Estate Investment Trust (REIT) recorded an increase of 115.3% during the review period.
Even though Aktiv Properties ended 2016 with a consolidated net loss of 274,000 levs, the company shares were among the most traded stocks on the Sofia bourse at that time.
As a result, the BSE announced in March that as of July 20 Aktiv Properties will become a component of two of its indices - the BG-REIT index, which tracks the performance of the major companies on the Special Purpose Vehicles segment, and the BGBX40.
The announcement propelled the company shares significantly higher, although the pace of the increase slowed down after the REIT said its first-half consolidated net loss has widened to 31,000 levs from 2,000 levs in the first six months of 2016
3. Svilosa +110.38% to 4.7 levs
The shares of cellulose producer Svilosa gained 110.38% to 4.7 levs during the 12 months ended November 30, 2017 on the back of strong financial performance and the company's intention to set up a joint venture with a foreign peer.
The company's consolidated first-quarter net profit more than tripled to 4.5 million levs. Svilosa sustained its robust performance in next two quarters and reported a fourfold annual increase of net profit, to 20.8 million levs, in the first nine months of the year.
Svilosa announced in September it intends to set up a 50/50 joint venture in Bulgaria with Indian peer Sigachi Industries by the end of 2017. The new company will have a registered capital of 25 million euro.
4. Korado Bulgaria +102.62% to 6.871 levs
Steel panel radiators manufacturer Korado Bulgaria saw its share price soar 102.62% to 6.871 levs in the review period.
Korado Bulgaria's net profit rose to 2.9 million levs in 2016 from 1.9 million levs in the previous year and the company decided to distribute as dividend 79% of the profit, or some 0.26 levs per share. In August, the company said it intends to increase its capital to 13.2 million levs from 8.8 million levs via a bonus share issue. Korado Bulgaria's pre-tax profit rose by 43% year-on-year to 4.2 million levs in the first nine months of 2017 and the BSE said it has decided to move the company to its Premium segment as of November 16.
5. CEZ Distribution Bulgaria +99.95% to 273.0 levs
CEZ Distribution Bulgaria doubled its share price during the twelve months ended November 30 as its majority owner, Czech energy group CEZ, continued negotiations for the sale of its assets in Bulgaria with several potential investors. The shares of the company added 99.95% to 273 levs.
The CEZ Group has already reached an agreement to sell one of its Bulgarian assets, the Varna thermal power plant, to Bulgarian-based logistics company SIGDA and it is expected to announce its final decision on the sale of CEZ Distribution Bulgaria by the end of 2017.
6. Bulgarian Stock Exchange +94.75% to 4.9 levs
The share price of the Bulgarian Stock Exchange (BSE) recorded a 94.75% increase in the review period after the Sofia bourse operator said it is exploring options to acquire the Independent Bulgarian Energy Exchange (IBEX) from its sole owner, state-owned Bulgarian Energy Holding (BEH) company.
The rise in the BSE share price took place mostly in the second half of the year. In August, the BSE said it has reached an agreement with BEH to acquire the IBEX for 5.2 million levs and intends to finance the acquisition through proceeds from the sale of government securities it owns. The deal has already received approval from the BSE shareholders and the country's competition regulator and is expected to be wrapped up in the following months.
7. First Investment Bank +89.12% to 5.39 levs
First Investment Bank (Fibank), Bulgaria's third largest lender by assets, saw its share price increase by an annual 89.12% to 5.39 levs at end-November 2017.
The sharp rise, which began in March, coincided with the announcement the bank is exploring options for its development, which might include strategic partnerships and/or consolidation, a capital increase via a new share issue, or attracting new key investors.
Fibank increased its consolidated net profit to 63.9 million levs in the first nine months of 2017 from 59.0 million levs in the prior-year period, despite a drop in total revenue from banking operations to 300.4 million levs 356.7 million levs in the comparable period of last year. The drop was counteracted by a decline in amortisation costs to 59.9 million levs from 141.4 million levs.
8. Eurohold Bulgaria +80.68% to 1.319 levs
Financial and insurance group Eurohold Bulgaria recorded an annual increase of 80.68% to a closing price of 1.319 levs per share on November 30, 2017, on the back of strong financial performance and news regarding a capital hike and a new bond issue.
The company saw its share price increase sharply at the beginning of May, when it announced its consolidated net profit has increased to 1.6 million levs in the first quarter of 2017, from 21,000 levs in the like period of 2016. A week later the company said it plans to distribute a gross dividend of 0.01 levs per share for 2016, up from 0.00287 levs paid out for 2015.
In October, Eurohold Bulgaria said its shareholders have approved a proposal to increase the share capital by 40.3 million levs to 202 million levs and to issue a five-year bond of up to 100 million euro, in order to refinance its debt at a lower interest rate. Later that month, Bulgaria's financial regulator approved the prospectus for the capital hike.
On December 1, Eurohold Bulgaria issued 70 million euro worth of five-year notes carrying a fixed annual interest rate of 6.5%.The funds raised through the issue will be used for purchasing the notes from the previous 47 million euro issue due December 2021 that carries an annual coupon of 8.0%, as well as for developing and expanding Eurohold's business.
9. EMKA +68.03% to 3.29 levs
The share price of Bulgarian cable and wire manufacturer Emka increased by 68.03% year-on-year to 3.29 levs per share at end-November 2017 backed by solid financial performance of the company.
In May, EMKA announced it will distribute 1.1 million levs as dividend for 2016, up from 900,000 levs it paid out for 2015.
The company ended the first nine months of the year with a net profit of 3.2 million levs, up from 2.2 million levs profit in the like period of 2016. The increase was driven by a rise in revenue, which grew to 71.9 million levs from 59.9 million levs.
10. Sopharma +49.72% to 4.27 levs
Sopharma closes the list of top 10 gainers on the BSE in the twelve months ended November 30, 2017. Sopharma shares rose 49.72% to a closing price of 4.27 levs during the period under review.
The Bulgarian pharmaceutical company continued to post strong financial results on the back of a significant rise in exports. Sopharma ended the first nine months of 2017 with a new profit of 32.7 million levs, which compares to 31.6 million levs in the like period of 2016. Its increased by an annual 16% in the first nine months of the year, with exports up 25%.
In September, Sopharma said it has signed an agreement to absorb its local peer Unipharm, under which Unipharm shares will be converted into Sopharma shares at a ratio of 1:891512.
In October, US-based pharmaceutical company Achieve Life Sciences said on Thursday it has entered into an exclusive supply agreement with Sopharma for the manufacture of cytisine active pharmaceutical ingredient and finished tablets. Under the terms of the deal, Sopharma will produce GMP-grade cytosine for Achieve's use in the development and commercialization of cytosine.
This was followed by news that Sopharma is considering opening two production plants - in Sofia and Kazanlak in 2018.The plant in Sofia will include manufacturing facilities for lyophilic products, while the Kazanlak plant, in central Bulgaria, will boost the company's extraction capacity for the manufacturing of phyto products.