COFINEC SLIPS ON BUDAPEST BOURSE BUT FUTURE STRONG .
Emese Bartha
BUDAPEST 1996-08-27
Expectations that Cofinec S.A. , the Hungarian bourse 's first foreign listing , will report a disappointing first half have depressed the stock below its issue price , but analysts expect a rebound in the long term .
" The first half of the year is unlikely to be as strong as expected so the company will probably be unable to reach its annual plan in 1996 , " said Gabor Sitanyi , a London-based analyst for ING Barings .
The French-registered packaging materials company , which floated its shares in Hungary in July , for most of the past two weeks hovered below the 6,425 forints / Global Depositary Receipts price of its initial offering , which was oversubscribed .
The company , which asked for a two-week delay from the usual August 15 deadline for reporting first-half results , closed on Tuesday at 5,800 forints , down 300 .
" Cofinec 's first-half figures will be ...
between one-third of two-fifths of its annual plan , " said Tamas Erdei , a Budapest-based analyst for ABN-AMRO Hoare Govett .
Analysts blame , at least partly , Hungary 's macroeconomic environment for the weaker figures for Cofinec which , operating in Hungary , Poland and the Czech Republic , now generates about 55 to 60 percent of its annual sales from Hungary .
Hungary 's Gross Domestic Product fell one percentage point in the first quarter while real wages plunged 7.2 percentage points in the first half of 1996 .
Both will have their impact on Cofinec 's figures , the analysts said .
Despite the current difficulties , however , analysts were convinced that Cofinec 's outlook was strong .
" The eastern European market offers good chances , " said Erdei . "
Just like many other companies on the bourse , Cofinec has big growth opportunities . "
" At the same time , it 's an advantage for Cofinec that it has a foreign management which perhaps understands the market better , " Erdei added .
" Cofinec is a very good story in the long-term as the per capita packaging consumption is still so low in east Europe that a very strong increase can be expected ( long-term ) , " Sitanyi said , saying that several recent moves by Cofinec boosted its position .
Among them , he noted that Cofinec had acquired the outstanding stake in its Czech folding company Krpaco a.s. , increasing its ownership to 100 percent , so in the second half the whole of Krpaco 's figures will be consolidated .
The company also repaid some $ 21 million of debt , well above the originally planned $ 8 million to $ 9 million .
In addition , its Polish operation began with some six weeks of delay due to cold winter weather and the test run was also longer than planned .
-- Budapest newsroom ( 36 1 ) 266 2410