Company profile Investor.BG AD€¦ · Company profile Investor.BG AD Internet websites 11 February...
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Bulgaria Company profile Investor.BG AD Internet websites 11 February 2011 Refer to important disclosures, disclaimers and analyst certifications at the end of the body of this report 8 9 10 11 12 13 11-Feb 11-Mar 11-Apr 11-May 11-Jun 11-Jul 11-Aug 11-Sep 11-Oct 11-Nov 11-Dec 11-Jan Bloomberg symbol 4IN BU Common share price (BGN) 12.30 Total market cap (BGN m) 14.7 Total market cap (€ m) 7.5 Total shares (m) 1.2 Average daily volume (BGN) 3,110 12M Hi/Lo (BGN) 13.8/8.6 Common stock 1M 3M 12M performance -0.8% 29.5% 30.7% Valuation 2010 2011F 2012F P/E (x) 46.5 56.0 50.0 P/B (x) 3.5 3.7 3.4 P/S (x) 4.3 4.1 3.4 EPS 0.3 0.2 0.2 Yield (%) - - - Priced at COB 10 February 2011 2010 2011F 2012F ROA (%) 6.8 6.5 6.3 ROE (%) 7.7 7.0 7.1 EBITDA margin (%) 15.3 12.3 13.0 EBIT margin (%) 10.6 6.5 6.3 Profit margin (%) 9.3 6.5 6.8 Shareholders Company insiders 71.2% Other shareholders 28.8% Investor relations: Mr Mariyan Yordanov www.ibg.bg +359 2 812 98 14; [email protected] US$/BGN 1.44500 €/BGN 1.95583 KBC Securities N.V. +359 2 858 3311 [email protected] KBCB<GO> Business overview: Investor.BG AD owns and operates websites offering various services to Bulgarian internet users. Investor.BG’s 14 websites had on average 1.7 million unique visitors per month in the first ten months of 2010. This equates to 52% of internet users in Bulgaria, which makes Investor.BG the second largest internet company in the country in terms of coverage. Outlook for Bulgarian internet use and advertising: Internet usage has been growing steadily in Bulgaria in recent years. Regular internet users increased from 22% of the population in 2006 to 40.0% of the population in 2009. However, 53% of population has never used the internet versus only 30.0% in the EU-27. Bulgaria is also lagging behind the rest of the EU in terms of money spent on online advertising. Only 6.2% of main media spending was directed towards internet advertising in 2009. However, this still represents more than 100% growth compared to 2007, when only 3.0% of main media spending went to internet advertising. We expect internet penetration and internet advertisement expenditures to continue to grow rapidly over the next few years, as Bulgaria is currently at the bottom of both categories in an EU comparison. We expect both internet penetration and internet advertising in Bulgaria to have converged to European averages by 2015. Investment case: With its portfolio of internet sites and large market share Investor.BG AD is well positioned to benefit from the expected increase in internet ad spending. The company is also expected to reduce its reliance on display revenue and develop alternative sources such as classifieds and search revenues, which have been neglected in the past. Capital increase: Investor.BG AD has expanded its portfolio from just one internet site in 2000 to 14 sites in 2011. The firm intends to continue to expand its portfolio in Bulgaria and to improve the design and services offered by its current sites. Investor.BG AD intends to offer 239,892 new common shares at BGN 12.4 per share and raise BGN 2,974,660 in new equity capital in 2011. Investors who want to participate in the capital increase must obtain participation rights in order to subscribe to newly issued shares. Current shareholders will receive one free participation right for each common share they own. Five participation rights will allow investors to acquire one new common share at BGN 12.4 per share. All other investors must acquire the participation rights from the open market.
Transcript of Company profile Investor.BG AD€¦ · Company profile Investor.BG AD Internet websites 11 February...
Bulgaria
Company profile
Investor.BG AD
Internet websites
11 February 2011
Refer to important disclosures, disclaimers and ana lyst certifications at the end of the body of this report
8
9
10
11
12
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11-Feb 11-Mar 11-Apr 11-May 11-Jun 11-Jul 11-Aug 11-Sep 11-Oct 11-Nov 11-Dec 11-Jan
Bloomberg symbol 4IN BU
Common share price (BGN ) 12.30 Total market cap (BGN m) 14.7 Total market cap ( € m) 7.5 Total shares (m) 1.2 Average daily volume (BGN) 3,110 12M Hi/Lo (BGN) 13.8/8.6
Common stock 1M 3M 12M performance -0.8% 29.5% 30.7%
Valuation 2010 2011F 2012F P/E (x) 46.5 56.0 50.0 P/B (x) 3.5 3.7 3.4
P/S (x) 4.3 4.1 3.4
EPS 0.3 0.2 0.2 Yield (%) - - -
Priced at COB 10 February 2011 2010 2011F 2012F ROA (%) 6.8 6.5 6.3 ROE (%) 7.7 7.0 7.1
EBITDA margin (%) 15.3 12.3 13.0
EBIT margin (%) 10.6 6.5 6.3 Profit margin (%) 9.3 6.5 6.8
Shareholders
Company insiders 71.2% Other shareholders 28.8% Investor relations: Mr Mariyan Yordanov
www.ibg.bg +359 2 812 98 14; [email protected]
US$/BGN 1.44500 €/BGN 1.95583
KBC Securities N.V. +359 2 858 3311 [email protected] KBCB<GO>
Business overview: Investor.BG AD owns and operates websites offering various services to Bulgarian internet users. Investor.BG’s 14 websites had on average 1.7 million unique visitors per month in the first ten months of 2010. This equates to 52% of internet users in Bulgaria, which makes Investor.BG the second largest internet company in the country in terms of coverage. Outlook for Bulgarian internet use and advertising: Internet usage has been growing steadily in Bulgaria in recent years. Regular internet users increased from 22% of the population in 2006 to 40.0% of the population in 2009. However, 53% of population has never used the internet versus only 30.0% in the EU-27. Bulgaria is also lagging behind the rest of the EU in terms of money spent on online advertising. Only 6.2% of main media spending was directed towards internet advertising in 2009. However, this still represents more than 100% growth compared to 2007, when only 3.0% of main media spending went to internet advertising. We expect internet penetration and internet advertisement expenditures to continue to grow rapidly over the next few years, as Bulgaria is currently at the bottom of both categories in an EU comparison. We expect both internet penetration and internet advertising in Bulgaria to have converged to European averages by 2015. Investment case: With its portfolio of internet sites and large market share Investor.BG AD is well positioned to benefit from the expected increase in internet ad spending. The company is also expected to reduce its reliance on display revenue and develop alternative sources such as classifieds and search revenues, which have been neglected in the past. Capital increase: Investor.BG AD has expanded its portfolio from just one internet site in 2000 to 14 sites in 2011. The firm intends to continue to expand its portfolio in Bulgaria and to improve the design and services offered by its current sites. Investor.BG AD intends to offer 239,892 new common shares at BGN 12.4 per share and raise BGN 2,974,660 in new equity capital in 2011. Investors who want to participate in the capital increase must obtain participation rights in order to subscribe to newly issued shares. Current shareholders will receive one free participation right for each common share they own. Five participation rights will allow investors to acquire one new common share at BGN 12.4 per share. All other investors must acquire the participation rights from the open market.
Bulgaria
2
Investment case
Convergence in internet
advertisement spending to
levels in other European
markets will drive revenue
growth going forward
Bulgaria lags behind other European markets in terms of both internet penetration and the proportion of internet advertising as a percentage of total advertising. However, Bulgaria has been catching up rapidly and we expect both categories to converge to European averages by 2015. With its portfolio of 14 internet sites and 1.7m unique visitors per month, Investor.BG AD is well positioned to benefit from the expected market expansion. Until now, 91.4% of the firm’s revenues have been generated by display, while alternative revenue sources such as search and classifieds have been neglected. However, management is putting focus on diversifying revenue sources and we now expect revenues from search, classified, events and internet value added services (IVAS) to reach 22% of total revenues by 2015. A number of the firm’s internet sites allow opportunities to seek these additional revenue sources.
Capital increase
Investor.BG AD intends to offer 239,892 new common shares at BGN 12.4 per share to raise BGN 2,974,660 in new equity capital in 2011. Total shares outstanding are estimated to increase from 1,199,460 shares before the capital increase to 1,439,352 shares after the capital increase. The offering will be considered successful if investors subscribe to at least 71,967 new shares. Current common shareholders will receive one participation right for each common share they own. Five participation rights will allow the subscription to one new common share. Current common shareholders who do not want to participate in the capital increase will be able to sell their participation rights on the stock market. Current common shareholders will not have to pay to receive one participation right for each common share they own. All investors who want to participate in the current capital increase of Investor.BG AD will have to obtain five participation rights for each new common share they intend to purchase. Five participation rights allow investors to purchase one common share at BGN 12.4 per share. KBC Securities NV has been retained as sole manager of the current capital increase of Investor.BG AD.
Use of funds
The management of Investor.BG AD intends to use the funds from the current capital increase to further develop the firm’s current portfolio of 14 internet sites and to increase the total number of internet sites in the portfolio, either through the acquisition of existing internet sites or the development of new internet sites.
Stock warrants outstanding
Investor.BG AD issued 79,963 stock warrants in October 2010. The term of the warrants is five years and the strike price is BGN 12.4. The strike price of the warrants will not change after the new capital increase because there is no dilution of capital.
Bulgaria
3
Internet penetration in Bulgaria
Internet usage has been growing steadily in Bulgaria in recent years. Regular internet users (i.e. using the internet at least once a week) increased from 22% of the population in 2006 to 40.0% of the population in 2009. However, 53% of the Bulgarian population has never used the internet versus 30.0% in the EU-27. There is also significant room for improvement in broadband penetration, which stands at 13.0% of the Bulgarian population versus 24.8% in the EU-27.
Europe: Internet penetration
Bulgaria: Internet growth
86%
82%
60%
58%
57%
55%
54%
52%
40%
31%
28%
18%
0% 20% 40% 60% 80% 100%
Sweden
Denmark
EU 27
Slovenia
Hungary
Lithuania
Czech Republic
Poland
Bulgaria
Romania
Russia
Ukraine
Source: EC, Gemius (data for Russia and Ukraine)
Source: EC
Use of internet services is low in Bulgaria. Bulgarians use the internet to look up information about goods and services, downloading/listening/watching movies and music. E-commerce is still uncommon with only 5.0% of the population ordering goods and services online for private use versus 37.0% in the EU-27. Only 1.0% of Bulgarians are sellers of goods and services online (via auctions) versus 10% in the EU-27. According to Nielsen Online, 52% of domestic internet users are between the ages of 18 and 34 years.
Internet advertising
Bulgaria lags behind the rest of the EU in terms of money spent on online advertising. Only 6.2% of main media spending targeted internet advertising in 2009. However, this still represents more than 100% growth since 2007, when only 3.0% of media spending reached internet advertising. News websites were able to collect 44.1% of all money spent on internet advertising in 2009. According to Piero 97, 80% of all money spent on internet advertising in Bulgaria is absorbed by 10 media groups, which control 120 websites. These media groups are bTV, Darik Web, Dir.bg, Investor.BG, Mail BG, MSKEY, NEG, Net Info, Sanoma and Web Ground Group. Of these, only Investor.BG is a public company.
22%
28%33%
40%
0%
10%
20%
30%
40%
50%
2006 2007 2008 2009
Bulgaria
4
Online ad spending as % of total ad spending in 200 9
Online ad spending (€ per capita)
23.4%
17.8%
13.4%
10.3%
6.2%
1.8%
0%
6%
12%
18%
24%
Norway
Sweden
Nether
lands
Germ
any
Franc
e
Switzer
land
Finlan
d
PolandSpa
in
Russia
Belgium Ita
ly
Hungar
y
Turke
y
Austri
a
Slovenia
Bulgar
ia
Croat
ia
Greec
e
Romania
24 23 22
19
16
13 12 119
64 4
2
0
6
12
18
24
Czech
Rep
ublic
Hungar
y
Poland
Slovenia
Estonia
Russia
Slovakia
Latvi
a
Croat
ia
Lithu
ania
Bulgar
ia
Romania
Ukrain
e
Source: IAB Europe/WARC
Source: IAB Europe/WARC
Investor.BG AD
Earnings outlook
We expect Investor.BG to deliver a 2010-2015 earnings CAGR of 47.1%, driven by higher sales and better margins. The company’s earnings fell 34.3% y/y in 2009 and 38.1% y/y in 2010 due to higher salary and benefits expenses. The management has been taking on new employees as a result of expanding the portfolio of internet sites. We expect the addition of new sites and new employees to benefit Investor.BG going forward, as the current portfolio of internet sites will allow the firm to take advantage of increasing ad spending on the internet in Bulgaria. We forecast the company’s earnings at BGN 0.3m (up 7.3% y/y) in 2011, BGN 0.4m (up 4.0% y/y) in 2012 and BGN 0.5m (up 33.8% y/y) in 2013. In 2015 we expect earnings to reach BGN 2.2m.
Investor.BG: Income growth (BGN m)
Investor.BG: Revenue mix (BGN m)
0.0
0.5
1.0
1.5
2.0
2.5
2009 2010 2011F 2012F 2013F 2014F 2015F
Net income
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011F 2012F 2013F 2014F
Display Classified, search and events IVAS
Source: KBC Securities
Source: KBC Securities, Investor.BG AD
Bulgaria
5
Sales outlook
IAB Europe expects internet advertising spending in Bulgaria to increase from 6.2% in 2009 to 11.7% by 2015. Bulgaria lags behind other CEE markets in this category but has been catching up rapidly in recent years and we believe convergence by 2015 is a likely scenario. Investor.BG AD attracts 6.6% of all money spent on internet advertisement in Bulgaria and we expect the firm to maintain its market share going forward. For 2011 the company has already signed agreements with clients for advertisement for BGN 2.2m. We forecast the company’s sales at BGN 4.3m (up 27.0% y/y) in 2011, BGN 5.2m (up 19.0% y/y) in 2012 and BGN 6.2m (up 19.1% y/y) in 2013. We expect revenues to reach BGN 8.8m in 2015. At present, Investor.BG AD generates 91.4% of its revenues from display. The management is currently focusing on increasing revenues from search, classifieds events and IVAS , thus we now forecast these sources of revenues to increase to 10% of overall revenues in 2011, 13% in 2012 and 16% in 2013. Our forecast is not factoring in revenues from possible future acquisitions. Management believes revenues from acquisitions could reach BGN 1.6m in 2015.
Business overview
According to research by Gemius, Investor.BG AD’s 14 websites had on average 1.7 million unique visitors per month in the first 10 months of 2010, which covers 52% of internet users in Bulgaria. Investor.BG consistently ranks among the fastest developing technology companies in CEE according to Deloitte: the firm moved from sixth to fifth place in 2010, with 1,633% revenue growth in the last five years. The firm also holds 75th place in the Deloitte Technology Fast 500 (EMEA) rankings and was selected as country Representative in the HSBC European Business Awards 2010. In 2009, 3TS Cisco Growth Fund acquired 16.8% of the company at BGN 12.4 per share and has since increased its share to 21.3%.
Internet sites of Investor.BG AD Unique visitors Page impressions (m)
Dnes.bg 569,842 22.9
Investor.bg 156,523 4.3
Teenproblem.net 372,661 5.8
Puls.bg 269,565 2.1
Tialoto.bg 265,353 5.9
gol.bg 149,151 6.2
AutoMedia.bg 100,384 1.3
mp3.bg 65,274 0.4
Snimka.bg 395,129 20.7
rabota.bg 88,846 2.7
NasamNatam.com 111,351 0.8
Blog.bg 591,921 5.7
Aha.bg 297,645 269.1
Start.bg 968,989 6.2
Source: Gemius
Bulgaria
6
Dnes.bg is Bulgaria’s most popular news website. The internet site was started in
2005. Dnes.bg had 569,842 unique users and 22.9 million page impressions in October 2010.
News websites: Visitors (real users)
News websites: Page views
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
bTV
dnes.bg
dnevnik.bg
dariknews.bg
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
Jan'09 May'09 Sept'09 Jan'10 May'10 Sept'10
bTV
dnes.bg
dnevnik.bg
dariknews.bg
Source: Gemius
Source: Gemius
Market share by page views, November 2010
Dnes.bg is the most popular
news website in Bulgaria with
26% market share
13%
26%
9%11%
16%
2%
6%
9%
8%bTV
dnes.bg
dnevnik.bg
dariknews.bg
DNES.dir.bg
Novini.dir.bg
actualno.com
24chasa.bg
trud.bg
Source: Gemius
Bulgaria
7
Investor.bg is Bulgaria’s most popular business and finance news website. The
internet site was started in 2000. The site provides news, articles, market quotes and financial statements. Investor.bg had 156,523 unique users and 4.3 million page impressions in October 2010.
Business and finance websites: Visitors (real users)
Business and finance websites: Page views
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
capital.bg
investor.bg
expert.bg
moitepari.bg
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
capital.bg
investor.bg
darikfinance.bg
moitepari.bg
infostock.bg
Source: Gemius
Source: Gemius
Market share by page views, November 2010
Investor.BG is the main source
of information for Bulgarian
investors
16%
5%
1%2%
3%
6%
9%
7% 1%
50%
capital.bg
investor.bg
expert.bg
lev.bg
pari.bg/ipo.bg
Finance.dir.bg
darikfinance.bg
moitepari.bg
infostock.bg
finance5.bg
Source: Gemius
Bulgaria
8
Teenproblem.net was started in 2002. Investor.BG acquired the site in 2007.
Teenproblem.net had 372,661 unique users and 5.8m page impressions in October 2010.
Teen websites: Visitors (real users)
Teen websites: Page views
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
Jan'
09
Mar
ch'0
9
May
'09
July
'09
Sep
t'09
Nov
'09
Jan'
10
Mar
ch'1
0
May
'10
July
'10
Sep
t'10
Nov
'10
teenproblem.net
Other teen related
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
10,000,000
Jan'
09
Mar
ch'0
9
May
'09
July
'09
Sep
t'09
Nov
'09
Jan'
10
Mar
ch'1
0
May
'10
July
'10
Sep
t'10
Nov
'10
teenproblem.net
Other teen related
Source: Gemius
Source: Gemius
Market share by page views, November 2010
Teenproblem.net is the largest
domestic teen-related internet
site in Bulgaria
0%
20%
5%2%
5%0%
11%
57%
teenproblem.net
teenzona.com
signal.bg
textove.com
dtrailer.com
hiclub.bg
vicove.com
thevoice.eu
Source: Gemius
Bulgaria
9
Puls.bg was started in 2007 and was acquired by Investor.BG in 2009. Puls.bg
had 269,565 unique users and 2.1m page impressions in October 2010. Puls.bg is Bulgaria’s most frequently visited health-related internet site. Investor.BG AD owns 50.1% of Puls.bg. Revenues of Puls.bg reached BGN 33,000 (up 73.7% y/y) in 2010 although the subsidiary still posted a loss of BGN 59,000 for the year. Investor.BG AD consolidates the results of Puls.bg.
Health-related websites: Visitors (real users)
Health-related websites: Page views
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
puls.bg
zdrave.bg
zdrave.net
health.bg
bggp.net
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
puls.bg
zdrave.bg
zdrave.net
health.bg
bggp.net
Source: Gemius
Source: Gemius
Market share by page views, November 2010
Puls.bg is the main source of
health-related information for
Bulgarians
3%0%
14%
83%
puls.bg
health.bg
bggp.net
zdrave.bg
Source: Gemius
Bulgaria
10
Tialoto.bg was started in 2004 and targets a female audience. The internet site
provides information about health, beauty, culture and fashion. Tialoto.bg had 265,353 unique users and 5.9m page impressions in October 2010.
Fashion and beauty websites: Visitors (real users)
Fashion and beauty websites: Page views
0
100,000
200,000
300,000
400,000
500,000
600,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
tialoto.bg az-jenata.com viewsofia.com
rozali cosmopolitan fashion
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
tialoto.bg az-jenata.com viewsofia.com
rozali cosmopolitan fashion
Source: Gemius
Source: Gemius
Market share by page views, November 2010
21%
5%
0%
28%
12%
2%
13%
16%
1%
2%
tialoto.bg
az-jenata.com
tia.bg
viewsofia.com
eva.bg
rozali
cosmopolitan
fashion
ladypopular.bg
ladyzoone.bg
Source: Gemius
Bulgaria
11
Gol.bg was started in 2005 and provides football and other sports news to local
fans. Gol.bg had 149,151 unique users and 6.2m page impressions in October 2010.
Sports websites: Visitors (real users)
Sports websites: Page views
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
gol.bg
gong.bg
sportal.bg
winner.bg
sport.bg
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
gol.bg
gong.bg
sportal.bg
winner.bg
Source: Gemius
Source: Gemius
Market share by page views, November 2010
7%4%
5%
17%1%
0%
1% 1%
64%
gol.bg
gong.bg
Sport.dir.bg
sportal.bg
sportline.bg
winner.bg
ring.bg
sport.bg
novsport.com
Source: Gemius
Bulgaria
12
AutoMedia.bg was started in 2005 and was acquired by Investor.bg AD in 2007.
The site targets auto enthusiasts in Bulgaria with auto industry news and articles. AutoMedia.bg had 100,384 unique users and 1.3m page impressions in October 2010.
Auto websites: Visitors (real users)
Market share by page views, November 2010
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
automedia.bg
auto.dir.bg
ams.bg
autohop.bg
tuning.bg
mobile.bg
7%
2%
62%
7%1%
9%
1%1%
0%1%9%
automedia.bg
rs-auto.bg
newcar.bg
autoblog.bg
topcars.bg
auto.dir.bg
ams.bg
autohop.bg
tuning.bg
mobile.bg
car24.bg
Source: Gemius
Source: Gemius
Mp3.bg was started in 2006. Mps3.bg had 65,274 unique users and 445,418 page
impressions in October 2010.
Mp3.bg: Visitors (real users)
Mp3.bg: Page impressions
0
50,000
100,000
150,000
200,000
250,000
300,000
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10
Mp3.bg
0
300,000
600,000
900,000
1,200,000
1,500,000
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10
Mp3.bg
Source: Gemius
Source: Gemius
Bulgaria
13
Snimka.bg was started in 2005 and allows users to upload photo files online.
Snimka.bg had 395,129 unique users and 20.7m page impressions in October 2010.
Snimka.bg: Visitors (real users)
Snimka.bg: Page views
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
snimka.bg album.bg
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
80,000,000
90,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
snimka.bg album.bg
Source: Gemius
Source: Gemius
Market share by page views, November 2010
38%
62%snimka.bg
album.bg
Source: Gemius
Bulgaria
14
Rabota.bg was started in 2004 and was acquired by Investor.BG AD in 2006. The
site allows users to search for jobs in Bulgaria. Rabota.bg had 88,846 unique users and 2.7m page impressions in October 2010.
Job seeking websites: Visitors (real users)
Job seeking websites: Page views
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
karieri.bgzaplata.bgrabota.bgbestjobs.bgjobtiger.bgjobs.bg
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
karieri.bg
zaplata.bg
rabota.bg
bestjobs.bg
jobtiger.bg
rabota.dir.bg
Source: Gemius
Source: Gemius
Market share by page views, November 2010
1% 3% 2%1%
93%
karieri.bg
zaplata.bg
rabota.bg
bestjobs.bg
jobs.bg
Source: Gemius
Bulgaria
15
NasamNatam.com was started in 2006 and was acquired by Investor.BG AD in
2008. NasamNatam.com is a travel website. It had 111,351 unique users and 0.8m page impressions in October 2010.
Travel websites: Visitors (real users)
Travel websites: Page views
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
NasamNatam.com
Trip.dir.bg
Posoka.com
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
NasamNatam.com
Trip.dir.bg
Posoka.com
Journey.bg* (Tyxo)
Source: Gemius
Source: Gemius, Tyxo
Market share by page views, November 2010
29%
10%1%
10%
46%
3%
1%
NasamNatam.com
Trip.dir.bg
Posoka.com
Travelblog.bg
Bulgariainside.com
Touristmedia.info
Journey.bg
Source: Gemius
Bulgaria
16
Blog.com was started in 2006. It had 591,921 unique users and 5.7m page
impressions in October 2010.
Blog websites: Visitors (real users)
Blog websites: Page views
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
blog.bg log.bg bglog.net (Tyxo)
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
blog.bg log.bg bglog.net(Tyxo)
Source: Gemius, Tyxo
Source: Gemius, Tyxo
Market share by page views, November 2010
6%
23%
71%1%
blog.bg
log.bg
blogcatalog.bg
bglog.net (Tyxo)
Source: Gemius
Bulgaria
17
Aha.bg is a social network with 700,000 registered users. The site was started in
2006. Of the site’s users, 47% are aged between 15 and 24 and a further 24% are aged 25-34. The site had 297,645 unique users and 269.1m page impressions in October 2010. Unlike major global players such as Facebook, which focus on allowing users to track friends and classmates, Bulgarian social networking sites focus almost exclusively on providing dating services, although they also allow friends to be added. As a result, the functionality of Bulgarian social networking sites allows them to be used as social networks, but their focus on providing dating services to local users allows them to flourish despite the advent of Facebook.
Social networks: Visitors (real users)
Social networks: Page views
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
aha.bg impulse.bg sladur.com
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
700,000,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
aha.bg impulse.bg sladur.com
Source: Gemius
Source: Gemius
Market share by page views, November 2010
2%
75%
23%aha.bg
impulse.bg
sladur.com
Source: Gemius
Bulgaria
18
Start.bg is an internet portal offering links in 22 different categories. Start.bg had
968,989 unique users and 6.2m page impressions in October 2010.
Portals: Visitors (real users)
Market share by page views, November 2010
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Jan'09 April'09 July'09 Oct'09 Jan'10 April'10 July'10 Oct'10
Start.bg Goldenpages.bg
17%
83%
Start.bg
Goldenpages.bg
Source: Gemius
Source: Gemius
Bulgaria
19
Financial data
Consolidated income statement – IFRS (BGN m) 2008 2009 2010 2011F 2012F 2013F 2014F 2015F
Revenues 2.7 2.9 3.4 4.3 5.2 6.2 7.3 8.8
Display revenues 2.7 2.9 3.1 3.9 4.5 5.2 5.9 6.8
Classified, search and event revenues 0.0 0.0 0.2 0.3 0.5 0.7 1.0 1.3
IVAS 0.0 0.0 0.1 0.1 0.2 0.3 0.4 0.6
Operating expenses -1.7 -2.3 -2.9 -3.8 -4.5 -5.3 -5.6 -6.1
Material expenses 0.0 0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1
External services -0.7 -1.2 -1.3 -1.9 -2.3 -2.6 -2.7 -2.8
Salaries and benefits -0.8 -1.0 -1.4 -1.7 -1.9 -2.3 -2.5 -2.9
Other operating expenses -0.2 -0.1 -0.1 -0.2 -0.2 -0.2 -0.2 -0.3
EBITDA 1.0 0.7 0.5 0.5 0.7 0.9 1.8 2.7
Depreciation -0.1 -0.1 -0.2 -0.2 -0.3 -0.4 -0.3 -0.2
EBIT 0.8 0.5 0.4 0.3 0.3 0.5 1.5 2.4
Net financial income/(expenses) 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.0
Financial income 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.0
Financial expenses 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Income before taxes 0.9 0.6 0.4 0.4 0.4 0.5 1.5 2.4
Tax expenses -0.1 -0.1 0.0 0.0 0.0 -0.1 -0.1 -0.2
Net income 0.8 0.5 0.3 0.3 0.4 0.5 1.3 2.2
Other comprehensive income 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total net income 0.8 0.5 0.3 0.3 0.4 0.5 1.3 2.2
Net income for the period 0.8 0.5 0.3 0.3 0.4 0.5 1.3 2.2
Net income belonging to firm's shareholders 0.8 0.5 0.3 0.3 0.4 0.5 1.3 2.2
Minority interest 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Source: Company data, KBC Securities forecasts
Financial ratios 2008 2009 2010 2011F 2012F 2013F 2014F 2015F
EBITDA margin (%) 35.9 22.9 15.3 12.3 13.0 14.4 24.0 30.3
EBIT margin (%) 32.0 18.1 10.6 6.5 6.3 8.2 20.1 27.5
Net profit margin (%) 29.4 17.5 9.3 7.8 6.8 7.7 18.0 24.9
ROA (%) 13.1 6.8 6.5 6.3 7.7 18.4 24.8
ROE (%) 14.0 7.7 7.0 7.1 9.2 21.4 27.3
Revenue growth (%) 10.3 16.8 27.0 19.0 19.1 19.3 19.4
EBITDA growth (%) -29.8 -21.7 1.5 26.2 31.6 99.8 50.3
EBIT growth (%) -37.4 -31.8 -21.8 14.5 55.5 191.9 64.0
Net income growth (%) -34.3 -38.1 7.3 4.0 33.8 179.7 64.7
P/E (x) 28.9 46.5 56.0 50.0 35.6 13.1 8.0
P/B (x) 3.8 3.5 3.7 3.4 3.2 2.6 1.9
P/S (x) 5.0 4.3 4.1 3.4 2.9 2.4 2.0
P/EBITDA (x) 22.0 28.1 33.3 26.4 20.0 10.0 6.7
EPS 0.4 0.3 0.2 0.2 0.3 0.9 1.5
Source: KBC Securities
Bulgaria
20
Operating cash flows – (BGN m) 2008 2009 2010 2011F 2012F 2013F 2014F 2015F
Earnings before taxes 0.9 0.6 0.4 0.4 0.4 0.5 1.5 2.4
Depreciation and amortization 0.1 0.1 0.2 0.2 0.3 0.4 0.3 0.2
Change in receivables 0.0 -0.1 0.0 -0.5 -0.2 -0.3 -0.3 1.8
Change in current liabilities 0.0 0.3 0.3 0.0 -0.1 0.2 0.1 -0.4
Change in other financial assets -0.1 -0.1 0.0 0.1 0.0 0.0 0.0 0.0
Cash generated by operating activities 0.9 0.8 0.8 0.3 0.4 0.9 1.6 4.1
Source: KBC Securities
Consolidated balance sheet - IFRS (BGN m) 2008 2009 2010 2011F 2012F 2013F 2014F 2015F
ASSETS:
Long-term assets:
Property, plant and equipment 0.2 0.2 0.2 0.6 0.6 0.6 0.5 0.6
Intangibles 2.3 2.8 3.5 4.2 4.0 4.3 4.3 7.0
Good will 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0
Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total long-term assets 2.6 3.1 3.8 4.8 4.6 4.9 4.8 7.6
Current assets
Receivables 0.2 0.4 0.5 0.5 0.9 1.2 1.4 1.8
Cash and equivalents 0.6 0.9 0.5 0.1 0.3 0.4 1.6 0.3
Other financial assets 0.0 0.1 0.1 0.1 0.0 0.0 0.0 0.0
Total current assets 0.9 1.3 1.1 0.7 1.2 1.6 3.1 2.1
TOTAL ASSETS 3.4 4.4 5.0 5.5 5.8 6.5 7.9 9.7
LIABILITIES:
Long-term liabilities:
Financial leasing 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0
Total long-term liabilities 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0
Current liabilities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Bank loans 0.0 0.0 0.2 0.2 0.2 0.5 0.6 0.2
Financial leasing 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Payables 0.0 0.3 0.3 0.3 0.0 0.0 0.0 0.0
Liabilities to related parties 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Liabilities to employees 0.0 0.1 0.1 0.1 0.3 0.3 0.3 0.3
Liabilities for social security benefits 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Tax liabilities 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total current liabilities 0.1 0.4 0.7 0.7 0.5 0.8 0.9 0.5
TOTAL LIABILITIES 0.1 0.4 0.7 0.7 0.6 0.8 0.9 0.5
EQUITY:
Share capital 1.2 1.2 1.2 1.4 1.4 1.4 1.4 1.4
Stock warrants 0.0 0.0 0.0 -0.0 -0.0 -0.0 -0.0 -0.0
Purchased own shares -0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Reserves 1.3 2.2 2.1 3.0 3.4 3.7 4.2 5.5
Retained earnings 0.8 0.5 0.9 0.3 0.4 0.5 1.3 2.2
Shareholders' equity 3.2 3.9 4.2 4.8 5.1 5.6 6.9 9.1
Minority interest 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0
TOTAL EQUITY 3.3 3.9 4.3 4.8 5.2 5.6 7.0 9.2
TOTAL LIABILITIES AND EQUITY 3.4 4.4 5.0 5.5 5.8 6.5 7.9 9.7
Source: Company data
Bulgaria
21
Important Bulgarian Disclosure
KBC Securities N.V. Bulgarian Branch is providing c orporate finance and investment banking services to Investor.bg AD and will continue to seek to provide such servic es in the future. KBC Securities N.V. Bulgarian Bra nch is the manger of the capital increase of Investor.bg AD. T his corporate profile does not constitute a recomme ndation to purchase the securities of Investor.bg AD and is so lely prepared for information purposes. Responsibility for the preparation of this profile is carried by KBC Securities NV Bulgarian Branch, address: Gotse Delchev Boulevard 22b, 2nd floor, Triaditsa Sofia, tel.: +359 2 858 33 11, fax: +359 2 858 33 66 KBC Securities NV Bulgarian Branch is registered in the Commercial Registry Agency as a branch of the brokerage house KBC Securities Belgium. KBC Securities Belgium, address: Havenlaan 12, 1080 Brussels is regulated by the Commission for Banking, Finance and Insurance, Belgium. KBC Securities NV Bulgarian Branch is entered in the register of the Financial Supervision Commission of Bulgaria, with notification as of 4 August 2008, under number 03-231. The activities of KBC Securities NV Bulgarian Branch are supervised by the Financial Supervision Commission of Bulgaria, address: “Shar Planina” No. 33, Sofia, and by the Commission for Banking, Finance and Insurance, Belgium. The following employees of KBC Securities NV Bulgarian Branch participated in the formulation of this corporate profile: Svetoslav Tassev KBC Securities NV Bulgarian Branch has exercised reasonable care to establish that: • information in this recommendation is fairly presented and is based on reliable sources; • the recommendation contains assumptions, estimates and expectations in terms of prices; • there are no relations or substantial financial interests of KBC Securities NV Bulgarian Branch or its employees involved in preparing this recommendation, either in respect to one or more financial instruments which the recommendation concerns or other major conflicts of interest in relation to the issuer which the recommendation concerns; • remuneration of the employees involved in preparing the recommendation is not connected to the results of this investment profile or investment transactions made by the investment intermediary; • there are no conflicts of interests between KBC Securities NV Bulgarian Branch or related entities known to the employees involved in preparing the recommendation or to persons who have not participated in drafting the recommendation but have had or may reasonably be assumed to have had access to the recommendation prior to its delivery to customers or public release; • KBC Securities NV Bulgarian Branch or related entity has no participation amounting to 5% or more of the capital of the issuer or the issuer's equity amounting to 5% or more than the capital of KBC Securities Belgium or to a related entity, if such circumstance exists; The recommendation has not been presented to the issuer prior to publication, unless clearly stated otherwise. KBC Securities NV Bulgarian Branch takes all due measures to prevent any conflict of interest related to specific recommendations. KBC Securities NV Bulgarian Branch is under no obligation to update or keep current the information contained herein. This recommendation is published for information purposes only and should not be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report has no regard to the individual investment objectives, financial situation or particular needs of any specific recipient and should not be relied upon as authoritative or taken in substitution for the exercise of judgment by any receiver. Each recipient should consider the appropriateness of any investment decision having regard to their own circumstances, the full range of information available and appropriate professional advice, and should consult their advisors to make sure all involved risks are fully understood. In particular, the risks associated with an investment in the securities or financial instruments under discussion are not explained in their entirety. Any forecasts or price targets shown for companies discussed in this report may not be achieved due to multiple risk factors including, without limitation, market volatility, sector volatility, corporate actions, unavailability of complete and accurate information or that underlying assumptions made in this report were inapposite. Investments in emerging markets involve high risk. The securities or investments may cause the investor to lose the amount invested. Past performance is not necessarily indicative of future performance. Changes in exchange rates may have an adverse effect on the value, price or income of the securities or investments. KBC Securities NV Bulgarian Branch assumes no liability whatsoever for any loss or damage arising from any use of this recommendation or its contents.
Interpretation of the recommendation:
BUY – total return is expected to appreciate 10% or more
HOLD – total return is expected to be between 10% and –10%
SELL – total return is expected to depreciate 10% or more
Not rated – KBC Securities does not provide BUY, SELL or HOLD recommendations for the securities of the company
Bulgaria
22
This publication has been prepared by KBC Securities N.V. Polish Branch, KBC Securities Hungarian Branch, KBC Securities NV Bulgarian Branch, Patria Finance a.s. (Czech Republic) and KBC Securities Romania SA and is distributed through KBC Securities NV or one of its subsidiaries (together “KBC Securities”). This publication is provided for informational purposes only and is not intended to be an offer, or the solicitation of any offer, to buy or sell the securities referred to herein. No part of this publication may be reproduced in any manner without the prior written consent of KBC Securities.
The information herein has been obtained from, and any opinions herein are based upon, sources believed reliable, but neither KBC Securities N.V. Polish Branch Kredyt Bank S.A., KBC Securities Hungarian Branch, Patria Finance a.s., KBC Securities Romania SA, KBC Securities nor its affiliates represent that it is accurate or complete, and it should not be relied upon as such. All opinions, forecasts, and estimates herein reflect our judgement on the date of this publication and are subject to change without notice.
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