Olainfarm AS (OLF1R, Nasdaq Riga)

Latvia based pharmaceutical company entangled into dispute between shareholders trading for less than 5 times last year’s earnings, growing top line at around 10% annually with consistently high ROE, trading at below company’s book value. We believe that shareholder disputes will resolve in time and will not fundamentally effect Olainfarm’s business prospects.

MCap 99M

PE 4.4

PBv 0.8

PS 0.7

DY 1% (5Y average)

ROE 14% (5Y average)

CAGR is 10%

Yearly stock trading volume is less than 10% making it an overlooked stock.

Olainfarm is the leading manufacturer in the chemical and pharmaceutical sector of the Baltic States with more than 45 years of experience.

Listed on NASDAQ Riga since 1997.

Olainfarm is is engaged in the manufacturing of finished drug forms and chemical pharmaceutical products in the Baltics. The group operates its activities through Medicine Production segment, Wholesale segment, Retail segment, Compression Materials segment and other segments.

Olainfarm exports to more than 60 countries worldwide and its main export markets are Russia, Ukraine, Belarus, The Netherlands, Kazakhstan, Uzbekistan, and
Germany. Farthest export market is Australia. Net sales break down geographically as follows: Latvia (29.4%), Russia (29.9%), Belarus (10.8%), Ukraine (9%), Europe (7.6%) and others (13.3%).

Olainfarm produces cardiological, neurologic, diuretic, spasmologic and antiallergic drug preparations, medicaments treating the digestive system, antibiotics and food supplements, as well as various active chemical ingredients and raw chemical materials. Its products include Amlodipine, Clonazepam, Euphillin, Furosemide, Furagin, Midolat, Protionol and Gripoflex, among others.

Company shareholders, who own 5% or more of issuer’s capital: Estate of Maligins Valerijs 46%, Nika Saveljeva 7.8%, Signe Baldere-Sildedze 7.8%, Irina Maligina 7.8%.

Financials and other info: https://lv.olainfarm.com/en/investors/

Long Olainfarm AS as of 01/21/2020

Purchase price: 7.22 Eu

Linas Agro Group AB (LNA1L; Nasdaq Vilnius)

Lithuania based agricultural holding company currently trading close to an all time low valuation due to recent unfavorable climate conditions negatively impacting company’s earnings. We expect unfavorable weather patterns and hence company’s earnings to mean revert in the near future.

MCap 96M

PE negative (5Y average is 7,5)

PBv 0.57

PS 0.13

DY 1.2% (5Y average)

ROE 3% (5Y average)

Compound annual growth rate (CAGR) is 5%

Yearly stock trading volume is less than 3% making it an overlooked stock.

Established in 1991. The company started its business with the export of the oilseed rape to Western Europe. The Group has been growing naturally and through acquisitions, engaging in new activities.

Currently, Linas Agro Group AB controls 38 subsidiaries in Lithuania, Latvia, Estonia and the Ukraine, having over 2,100 employees.

Listed on NASDAQ Vilnius since 2010.

Linas Agro Group AB activities are structured into five basic segments: The Grains and Oilseeds segment includes wheat, barley, rapeseed, sunflower and linseed, among others; The Feedstuffs segment’s activities include international supply of and trade in secondary products of the food industry, such as sunflower cake, sunflower meal and others; The Agricultural segment covers supplies of such products for crop production as seeds, fertilizers, plant protection products, and agricultural machinery; The Farming segment covers primary production of agricultural produce, including diary production, as well as cultivation of grains, rape and sugar beet, and the Other Products and services segment covers sales of solid biofuel.

Company shareholders, who own 5% or more of issuer’s capital: Akola ApS (Denmark) 69%, Darius Zubas (CEO) 11%.

Financials and other info: https://www.linasagrogroup.lt/en/to-investors/

Long Linas Agro Group AB as of 01/21/2020

Purchase price: 0.61 Eu

Grigeo AB (GRG1L;Nasdaq Vilnius)

Solid paper and wood industry company in Lithuania at a 20% depressed valuation due to recent environmental scandal with a 5% dividend yield.

MCap 76M

PE 5.7

PBv 1

PS 0.5

DY 5%

ROE 19%

Yearly stock trading volume of 3% making it an overlooked stock.

Established in 1923, but origin story dates back to the 19th century, when in 1823, paper was produced in the Kučkuriškiai paper factory for the first time in Lithuania.

Listed on NASDAQ Vilnius since 1994.

Grigeo, AB is the only paper and wood industry company group in Lithuania and one of the largest in the Baltic countries. The Group includes the following companies: Grigeo, AB, Grigeo Packaging, UAB, Grigeo Klaipėda, AB, Grigeo Baltwood, UAB, Grigeo Recycling, UAB and Mena Pak, AT.

Business processes cover almost the entire processing cycle of wood and paper components – from the tree up to the final product.

Major product classes: hygienic paper, container board, honeycomb paper core, corrugated cardboard and packaging, hardboard.

A number of awards in the Lithuanian market and the markets of other countries including multiple product of the year nominations.

Recent environmental damage scandal caused by the discharge of sewage into the channel which opens into the Curonian Lagoon.

Employees 800.

Information about shareholders, who own 5% or more of issuer’s capital: UAB “Ginvildos investicija” at 43.5%, Irena Ona Mišeikienė 13.07%.

Company pays a yearly uninterrupted dividend for multiple years.

Financials and other info: https://www.grigeo.lt/en/for-investors/about-this-section

Long Grigeo AB as of 01/21/2020

Purchase price: 1,195 Eu

Siauliu Bankas AB (SAB1L; Nasdaq Vilnius)

Highly profitable fastest growing bank in Lithuania (EU member country) with consistently high ROE available at book value specializing in commercial banking.

MCap 315M

PE 5.5

PBv 1

PS 2.5

DY 6%

ROE 20%

Yearly stock trading volume of 13% making it an overlooked stock.

Siauliu Bankas, AB was established in the year 1992. Listed on NASDAQ Vilnius since 1994.

Bank has 62 physical outlets in 37 towns, more then any other bank in the country.

4-th largest bank in Lithuania by market share of deposits and loans.

2.4 billion Eu in assets.

Fastest growing bank in Lithuania.

Employees > 800.

Siauliu Bankas AB Group has few subsidiaries: SB Lizingas (Consumer leasing and consumer credits), Bonum Publicum (Life insurance), also few others, notably real estate and investment management subsidiaries.

Shareholders’ structure: 50%/50% split between local and international investors. EBRD (European Bank for Reconstruction and Development) is the largest shareholder with 26% share.

Dividend policy states that the bank will aim to allocate at least 25% of the group’s annual profit in dividends.

Capital adequacy ratio >15%.

Cost to income ratio is constantly being pushed down by management and now down to almost ~35%.

Best customer service bank in the Baltics according to research by Dive in the year 2018.

Financials and other info: https://en.sb.lt/en/about-bank/investors/prospectus-and-reports/

Long Siauliu Bankas AB as of 01/21/2020

Purchase price: 0.535 Eu