TSE (Tallinn) Market Overviews

The downward sloping motion of OMX Tallinn index continued during the previous week, as it fell by 4.1%. This has been happening since July, and is caused by the negative media attitude against the Baltic economy, which influences mainly the decisions of foreign investors. The week’s turnover was 21,490,232 euros, which is twice the amount of Olympic Entertainment Group and Tallink Group added together. Just two stock values increased, namely Eesti Ehitus (EEH1T) and Tallink Group (TAL1T), respectively by 2.85% and 1.97%. On the contrary, Viisnurk (VSN1T), Trigon Property Development (TPD1T), and Baltika (BLT1T) were the weakest, declining accordingly by 26.74%, 20.75%, and 17.23%.

As the Tallinn Stock market declined a lot this week, the biggest increaser, AS Eesti Ehitus (EEH1T) went up only by 2.85%, which seems to be low for the top-performer in Baltics, but is actually quite a good result, compared to the enormously decreasing market. There are several reasons for the rise and stongness of this construction-company stock. Already 2 weeks ago, Eesti Ehitus announced it’s 3rd quarter unaudited results, and they seem to be strong; however, as the real estate market just started tossing out the air, next quarter results could show us the real and fair view of the company and how it has managed its risks. A good thing is that the company has lots of projects outside Baltics. Furthermore, last Thursday, a subsidiary of AS Eesti Ehitus acquired a national road maintenance contract of  Järva county for 2008-2015. During falling demand from private sector, this can be considered a useful and secure contract for maintaining cash flow. Moreover, on Monday AS Eesti Ehitus signed a construction contract for EUR 4.5 million. Lastly, on Monday Eesti Ehitus expanded by acquiring 52% of another construction firm. Although, the company is performing well, buying the stock is risky, because of the downward trend of OMX Tallinn, real estate bubble and overall macroeconomic situation of Estonia.

AS Viisnurk became the biggest loser of the last week. The price of its stock declined enormously:  by 26.75%. Its closing price as on 23.11.2007 was 2.19 euro. This huge decrease was the result of news about AS Viisnurk published in the beginning of the previous week. It was said that the net profit of Viisnurk in III quarter became 4 times smaller in comparison with the same period in the last year. AS Viisnurk deals with building materials and constructing, the turnover of its production of furniture and building materials significantly decreased.  The firm explains its failure as a result of poor sales during the summer and costs of expansion (AS Viisnurk built new branches of the shops Skano and spent a lot of money on marketing). Nevertheless, despite the failure in this quarter, as Viisnurk plans a quick expansion for the future, it is expected to increase its profits and turnover. AS Viisnurk is very unstable; only two weeks ago it was the winner, but the results of this week proved the opposite fact. Obviously, it will not recover quickly from this huge fall, but it might gradually return to the increase in prices.

Olympic Entertainment Group (OEG1T) had the largest turnover to amount a quater of the total value of deals during the week (€ 5,033,763). Moreover, the announcement of unaudited consolidated operating results for nine months of 2007 revealed, compared to year 2006 a declination of net and operating margins. This lead to the bearish response of investors, pushing the current stock price down by 12.25%.

By Taavi Mandel

Maia Sokolova

Veiko Visnapuu