Impossible upward march

The company results for Q2, which will be published in the course of the summer and may reflect good macroeconomic data, could provide an impulse for share price growth in Warsaw. The state of the Polish and global economy could, at the very least, be described as promising, as long as a suitable level of caution is maintained – but investors have become accustomed to doing so over the last six crisis-hit years. Q1 growth in the European Union amounted to 1.4 pct – not a great result, but the forecasts for this and the next year are promising and signify favourable conditions for growth on the stock exchanges. The situation in Poland looks even better – the revival is even more marked, with a GDP growth of 3.4 pct y-o-y, which is being driven by the internal demand, including strong investment growth – the most crucial growth factor from the point of view of the economy (growing by 10.7 pct y-o-y). The construction industry is also experiencing a boom. According to the data of the Polish Central Statistical Office (GUS), construction and assembly production for the first four months increased by over 10 pct. The results of non-financial enterprises reported by GUS also improved by 20 pct on last year and all this is happening with a zero increase in prices and low interest rates. The balance of the half-year indexes looks very bleak against this background – the WIG increased by less than 2 pct in the January–June period and the WIG 30 by 1.5 pct, whereas S&P 500 growth amounted to nearly 7 pct. The sluggishness of the Polish market was conspicuous compared to the developed stock exchanges, which hit their peaks at the end of May. Admittedly, as analysts point out, the price/profit index for Polish shares, which reflects the attractiveness of investing, is relatively high (app. 15 vs. app. 10 for the stock exchanges of our region) – but this is a reflection of the robust economic conditions; besides the same index for American and Western European markets is currently fluctuating at around 20. June did not change much in the landscape of the Warsaw Stock Exchange – both the escalation of the conflict in Ukraine and the outbreak of the taping scandal involving Polish political figures made any upward march impossible. The end of Q2 was also marked by a small adjustment on foreign markets. The industry indexes turned out to be more changeable than the broader ones – WIG-Construction decreased by over 1 pct despite the good results in the construction industry, whereas WIG-Developers gained as much as 6 pct.

As far as construction companies are concerned, the bounce in Elektrobudowa’s shares following considerable losses over the winter/spring period is worth noting. The current price stills seem to be too low judging by analysts’ recommendations. The feeling is that the prospects of the company are good and the impact of the situation in Ukraine on business is limited – Espirito Santo recommended ‘buy’ with a target price of over PLN 100. The brokerage house, which is owned by Bank BPS, started publishing its recommendations for construction firms at the end of June – these include buying shares in Budimex, Erbud and Unibep, and selling shares in Trakcja. The recommendation for the latter company is related to the planned IPO of Torpol, a company in the same segment and owned by Polimex, which is undergoing a restructuring process and disposing of assets to slim down the debt-burdened group. The public offer includes shares sold by Polimex and securities from a new issue. Meanwhile, Polimex has reached an agreement with its creditors that will lead to an issue of bonds, a conversion of the company’s liabilities into shares, opening guarantee lines and a postponement of the repayment of other liabilities. After its restructuring Polimex will mainly be active in the energy sector and petrochemical construction. PBG has also concluded its first agreement with its creditors, which could lead to an improvement in the situation of the erstwhile giant, as it has been mired in debt difficulties for two years. Mostostal Export, meanwhile, has disappeared from the stock exchange listings – the company has changed its name to MSX Resources and will now shift its activities into mining copper in Mongolia.

In the development sector, Gant is still fighting for its life – the company is on the brink of bankruptcy and liquidation. The matter will ultimately be settled in the courts, but this course has already been recommended by a committee of the company’s creditors. Celtic Development, on the other hand, found itself at the opposite extreme of investors’ moods and preferences – this time due to the bankruptcy of Energetyka Ursus, a company that had been blocking the construction of an estate on the site of the former Ursus tractor factory in Warsaw. The positive feeling towards healthy developers was evident in analysts’ recommendations: mBank recommended buying shares in Dom Development and Robyg, among others. According to the Central Statistical Office (GUS), in May developers started the construction of 78 pct more apartments than in the same month last year.