Beta Sec – Daily report 08-03-2024 – Market Monitor- Market Comment- In the Spotlight-

AthEx had a mixed day with banking sector losing all Wednesday’s gains as upcoming rebalancing after Piraeus placement and increase of free float seems to affect sector weights in major benchmarks despite the positive flavor in corporate results. Turnover skyrocketed to €1.33bn, best since 15 May of 2008 as Piraeus block trades cleared HSF placement.

General index closed at 1,425.04 points, down 0.53% to Wednesday’s 1,433.04 points. The large-cap FTSE-25 index lost 0.70%, ending at 3,450.45 points while mid-caps contracted 0.62%. The banks index sharply down by 2.86%, as Alpha lost 3.56%, NBG shed 3.70%, Eurobank shaded 2.14% and Piraeus eased 1.54%. In non-financials, Titan advanced 3.1% and GEK Terna collected 2.84%, while Viohalco conceded 1.85%. In total 55 stocks recorded gains, another 79 posted losses and 34 remained unchanged. Turnover amounted to €1,336.4m, up from Wednesday’s €118.1m.

A moderate bounce is expected, good set of results and growing rumors for M&A activity to keep interest high in today’s session. 

Greece: DBRS to review Greece’s credit rating after market. DBRS currently assigns to Greece a BBB (low) credit rating (investment grade) with Stable outlook.

Greece/Unemployment: Unemployment in Q4:23 dropped to 10.5% vs 10.8% in Q3:23 and 11.95 in Q4:22.

Greece/GDP: Greek economy grew by 1.2% in Q4:23 bringing FY:23 GDP growth to 2%, lower than the predictions both of the Greek government (2.4%), the EU (2.2%), IOBE (2.1%), KEPE (2.2%), IMF (2.3%) and BoG (2.3%). Recall that Greek GDP grew by 2.1% in Q3:23 and by 2.6% in Q2:23.

Piraeus Bank: A total of 337,599,150 Offer Shares were offered in the Offering by HFSF, it its entire 27% stake in the bank. 67,519,830 Offer Shares (namely 20% of the totality of the Offer Shares) were allocated to investors who participated in the Greek Public Offering. 43,887,889 Offer Shares (namely 65% of the Offer Shares allocated to the Greek Public Offering) were allocated to Retail Investors (as such term is defined in the final prospectus relating to the Greek Public Offering). 23,631,941 Offer Shares (namely 35% of the Offer Shares allocated to the Greek Public Offering) were allocated to Qualified Investors (as such term is defined in the final prospectus relating to the Greek Public Offering). 270,079,320 Offer Shares (namely 80% of the totality of the Offer Shares) were allocated to investors who participated in the International Offering. Taking into account valid subscriptions only, the total demand that was expressed in the Offering (i.e. in aggregate through the Greek Public Offering and the International Offering) amounted to 2,672,154,345 Offer Shares, exceeding the 337,599,150 Offer Shares to be disposed through the Offering (following full exercise of the Upsize Option by the HFSF), by approximately 7.92x.

Taking into account valid subscriptions only, the total demand that was expressed in the Greek Public Offering amounted to 253,841,298 Offer Shares, exceeding the 67,519,830 Offer Shares allocated in the Greek Public Offering, by approximately 3.76x. The demand from the 5.571 purchase applications of Retail Investors submitted in the Greek Public Offering corresponds to 130,348,373 Offer Shares, exceeding the 43,887,889 Offer Shares allocated to this category, by approximately 2.97 times. The demand from the 93 purchase applications of Qualified Investors submitted in the Greek Public Offering corresponds to 123,492,925 Offer Shares, exceeding the 23,631,941 Offer Shares allocated to this category, by approximately 5.23 times. HFSF’s total gross proceeds to be raised from the Offering, before deducting the expenses of the Offering borne by the HFSF, amount to €1,350,396,600. The expected date on which the Offer Shares will be credited with the investors’ securities accounts is set for Monday 11th March 2024

According to final settlement distribution domestic retail investors will get 33.6% of their initial interest while institutional investors will get 19.31%.

Gaming Sector: According to KapaResearch’s survey in a sample of over 5,000 people conducted on behalf of the Hellenic Gaming Commission, a total of 900,000 of Greek citizens participated in illegal gaming networks in 1.7-billion-euro transactions in 2023, while 10% of these players are between 17 and 21 years old.  A large majority of players feel that they are losing out by being involved with this kind of games while they are also afraid of the consequences of their actions.

Terna Energy: The company entered an 8 years agreement with Thessaloniki water (with a renewal term for another 4 years) for a PPA regarding the provision of energy to Thessaloniki Water (100GWh/year) from pure solar parks at €80/Mwh.

PPC: The Hellenic Competition Commission approved the sale of electronics and appliance chain Kotsovolos to the Public Power Corporation (PPC).

Helleniq Energy: HELLENiQ will commence negotiations with Italian energy company Edison next month to see which company will divest its stake in Elpedison, according to press reports. Elpedison is a producer and supplier of electricity and natural gas in Greece and is currently split 50-50 between HELLENiQ and Edison

Viohalco (FY:23 results): Net Debt at €1.873bn, down €184mn y-o-y. Adjusted EBITDA at €537.447mn vs €648.897mn in 2022, -17.2%. FY:23 gross dividend €0.12/share, flat y-o-y (DY 2.1%).

CC Details: Friday March 8 3pm local GR time

·        GR: +30 213 009 6000 or +30 210 94 60 800

·        UK: +44 (0) 800 368 1063

·        INTL: +44 (0) 203 059 5872

·        USA: +1 516 447 5632

·        WEB: https://87399.themediaframe.eu/links/viohalco23FY.html

Eurobank (Q4/FY:23 results review): Eurobank posted a strong set of results coming in line with our estimates. On reported level Eurobank posted €159.4m net profits including mainly €124m one-off related to recycling through P&L of FX reserves due to completion of the sale of Serbian operations (no TBV regulatory capital impact). On a full year basis Eurobank posted €1.25bn adjusted net profits which is a strong 18.8% RoTBV. In more details:

§  Net interest income rose by 46.9% against 2022 to €2,174m, driven by loans, bonds, derivative products and international business. Net interest margin increased by 84 basis points y-o-y to 2.75%.

§  Net fee and commission income expanded by 4.2% in 2023 to €544m, mainly due to fees from lending activities and accounted for 69 basis points of total assets.

§  As a result of the above, core income grew by 35.8% y-o-y to €2,717m. Total operating income increased by 3.2% to €2,803m in 2023.

§  Operating expenses were up by 5.2% compared to 2022 to €902m, mainly due to SEE operations, inflationary pressures and investments in IT. The cost to core income ratio improved to 33.2% in 2023, from 42.8% in 2022, while the cost to income ratio was 32.2%.

§  Core pre-provision income was up by 58.6% y-o-y to €1,816m, whereas pre-provision income strengthened by 2.3% versus 2022 to €1,902m.

§  Loan loss provisions increased by 24.7% against 2022 to €345m and corresponded to 85 basis points of the average net loans.

§  As a result of the above, core operating profit before tax rose by 69.4% in 2023 to €1,471m.

§  Adjusted profit before tax amounted to €1,550m and adjusted net profit rose by 6.6% in 2023to €1,256m. EPS reached €0.31 and the return on tangible book value amounted to 18.1% in 2023. Reported net profit reached €1,140m, compared to €1,347m in 2022.

§  SEE operations had a satisfactory contribution, as the adjusted net profit increased to €468m in 2023, from €211m in 2022, contributing 37.3% to the profitability of the Group. Core pre-provision income grew by 77.8% y-o-y and amounted to €522m, with core operating profit before tax rising by 68.6% in 2023 to €465m. The financial performance both in Cyprus and Bulgaria improved substantially in 2023, with the adjusted net profit reaching €258m and €189m respectively.

§  Developments on the asset quality front were better than expected. The NPE ratio fell to 3.5%9 in 2023, from 5.2% in 2022. NPE formation was positive by €138m in 2023, albeit substantially lower than the initial expectations. The stock of NPEs decreased by €644m9 versus 2022 to €1.5bn or €0.2bn after provisions. Provisions over NPEs improved from 75.5% in 2022 to 86.4% in 2023.

§  Capital adequacy remained robust during 2023, as the Total CAD reached 20.2%10 and CET1 17.0%, against CET1 overall capital requirement of 12.2%11 in 2024.

§  With regards to updated business plan Eurobank expects ROE to reach 18% in 2024 and beyond 15% beyond 2024 with payout gradually to increase 50% towards 2026. International operations will account c50% of Group’s core profit in 2026.

§  In the conference call management stated that it assesses potential opportunities in the M&A with substantial size in specific segments such as wealth banking. Tender offer for the remaining stake in Hellenic Bank to kick off in Q3:24 aiming to reach 64%.

§  Tangible book value per share increased by 21.1% in 2023 to €2.07. Eurobank trades 0.91x its FY:23 TBV. Proposed dividend for FY:23 at 0.09 eur/share subject to regulatory approval in May.

The following table summarise results vs. our 4Q:23 estimates:

Autohellas (FY:23 results): The company reported a strong set of FY:23 performance with sales and EBITDA coming much higher than our estimates while net income landed €5mn higher than our call of €79.54mn. FY:23 gross dividend €0.7/share (DY 5.2%), in line with our expectation for €0.72/share. In more details:

§  The Group recorded an increase of 31% in Consolidated Revenue, which amounted to €1,002.7 million compared to €765.6 million in 2022 and vs our estimate for €930.57mn. FCA Greece (FIAT/JEEP/ALFA Romeo), which was jointly acquired with SAMELET in May 2023 and renamed to Italian Motion, is not included in the Consolidated Revenue (it is consolidated through equity method). However, it produced sales of €174mn for the year 2023.

§  During 2023, fleet employed for short-term and long-term rentals (Greece and abroad) exceeded 57,000 cars, with the year’s new car purchases exceeding 14,000 units.

§  In the business segment turnover from car rental activity in Greece increased by 7% in 2023, reaching €268.4 million, but also 34.6% higher than in 2019. A significant contribution to the increase is made by long-term leases and mostly by the effective disposal of used fleet cars.

§  The Turnover of the activity of the international subsidiaries related to the rentals sector reached a total of €174.2 million compared to €92.8 million in 2022. The new activity of Hertz in Portugal, the largest subsidiary of Autohellas abroad, contributed a total of €98.3 million in Turnover, positively affecting the overall increase in operating profitability. The rest of the group’s subsidiaries in the Balkans and Cyprus recorded organic growth of 9.3%.

§  The car trading activity in Greece, with the gradual restoration of production and the expansion of the Group’s brand portfolio, demonstrated a significant increase in the Import/Distribution segment. The cumulative market share of the Autohellas Group held by Hyundai, KIA, SEAT/CUPRA, FIAT, JEEP, ALFA ROMEO was 25% in private car sales, 17% in company car sales and 20% in total new car registrations in Greece. The activity contributed a total of €560.1 million to the Group Turnover with an increase of 32.7%.

§  EBITDA accelerated 20.2% to €272.055mn vs €226.365mn, higher than our call of €255.75mn.

§  Operating Profit (EBIT) amounted to €139.8 million, compared to €120 million in prior year, an increase of 16.5%.

§  Earnings before tax reached €106 million

§  Net income, burdened by higher leasing and financial costs as a results of higher interest rates landed at €84.985mn vs €82.55mn in 2022 and €79.54mn which was our estimate.

§  AGM proposed dividend at €0.7/share vs €0.65 in 2022 and €0.72 our estimates

§  Overall a better than expected performance in sales and EBITDA lines vs our expectations and in line in the net income and the dividend distribution line. Remains Overweight on the forecasted strong prospects of Greek tourism both for 2024 and the coming years with a TP of €17.05/share. FY:24 projected PE 7.9x, EV/EBITDA 4.1x, DY 6.3%.

Other results: