Beta Sec – Daily report 10-08-2023: Market Monitor- Market Comment- In the Spotlight- Events, Announcements and Corporate Actions Calendar

Thursday, August 10, 2023

Market Monitor

The Athens Stock Exchange posted mild gains on low turnover yesterday, but underperformed European markets, which bounced bank after the Italian government watered down a plan for a windfall tax on banks. 

The ASE general index closed at 1,317.18 points, up 0.46%, on turnover of €65.65 million. Blue chips gained 0.38% and mid-caps 0.15%, while banks declined 0.26%. Sarantis outperformed all blue chips, rising 5.42%, followed by refiner Motor Oil (2.68%) and construction group GEK Terna (2.02%). Helleniq Energy, Quest and OPAP advanced more than 1%, while Alpha Bank and construction group Ellaktor dropped more than 1%. CCHBC gained 0.87% following a satisfactory H1:23 performance while OPAP gained 1.1%

In total 59 stocks secured gains, 56 sustained losses and 46 remained unchanged. Turnover retreated further to €65.65mn including pre-fixed transactions of €4.7mn, lower than Tuesday’s €69.63mn turnover.

We expect market to continue consolidation pattern and range trading in the 1,300-1,350 area while MSCI’s update of its Greek indices is awaited tonight. Potential entry of Piraeus Bank that will be  added to the MSCI Standard index is expected with no other changes.

Greece/Privatizations: Privatization agency Hellenic Republic Asset Development Fund (TAIPED) will publish the six competitive bids for the new concession of the Attiki Odos ring road linking the capital to its airport before September 9. It will then call on the highest bidder and those whose bids are up to 5% less than the highest to resubmit. The new concession will last 25 years and the price is expected to exceed €2 billion. The winner will be announced mid-September.

Greece/Banking sector: The European Central Bank reduced its Greek bond holdings by €172 million in June and July, to €37.979 billion, €1.82 billion from its spring 2022 high of €39.8 billion. The ECB had purchased these bonds as part of its Pandemic Emergency Purchase Program (PEPP) despite the fact that Greek debt was, and still is not, investment grade.

DOTSOFT: As of today, the 3,120,000 (CR) shares of the company are admitted to trading on the “ΕΝ.A. PLUS” of ATHEX, under the “Technology” sector. Start price of trading is set at €3.85. There is no floor /ceiling trading limit for the first three days of trading.

KRI KRI: The company trades ex FY:22 gross dividend €0.20/share (net €0.19/share) as of August 24. Dividend record date August 25. Dividend payment August 30.

MYTILINEOS: The company agreed to acquire from AVAX the latter’s electric retail activity (2.2% M/S) for €6mn plus another €7mn upfront payment. Max acquisition cost could reach €24mn based on Volterra’a financial performance allowing for an addition €11mn earn out. Mytilineos will reach a total 13% m/S following last year’s Watt+Wolt acquisition. Volterra recorded FY:22 sales €394.2mn, Gross profit €12.48mn, EBIT €42.79mn and Net profit €41.96mn assisted by an extraordinary one off gain of €39mn from the sale of its RES segment to PPC. Agreement pending approval by local competition authority.

CC HBC (Q2/H1:23 results review and CC highlights): CC HBC announced a sound set of H1:23 performance coming in ahead of consensus in bottom line (net income) by 9.1% courtesy of lower financial expenses y-o-y. Volumes, sales and EBITDA came in as expected while the company improved its FY:23 guidance in terms of sales. In more specific:

·        Overall organic volumes -1.0%, reported volumes +… Organic volume growth across all strategic priorities, with Sparkling vols +1.6%, Energy +20.9% and Coffee +21.9%; Stills declined 11.2%, led by Water. Market share gains of 60bps in Non-Alcoholic Ready-To-Drink (NARTD); maintained value share in Sparkling.

·        Organic revenue up 17.8%, driven by organic revenue per case growth of 19.0%, led by the effective delivery of price and mix improvements across all categories and segments

·        Reported revenue up 19.3%, reflecting strong organic growth and the consolidation of Multon in Russia since August 2022, which more than offset FX headwinds in Nigeria and Egypt.

·        Comparable gross profit margin grew 90 bps or 22.6% resulting in a gross profit margin of 35% despite comparable Cost of Goods Sold (COGS) per unit case up 13.1%.

·        Comparable operating expenses as a percent of revenue increased by 30 basis points to 24.0%, reflecting a disciplined approach to operating expenditure, which was more than offset by continued investment to further enhance execution in the market.

·        Comparable EBIT up 17.7%, with margin unchanged on an organic basis at 11.2% resulted in stronger than expected operating leverage from double-digit top-line growth. Comparable EBIT margin grew 20 basis points. Reported sales in line to €5.021bn vs €4.209bn in H1:22, up by 19.3%.

·        On a segmental basis, CC HBC presented strong double-digit organic revenue and EBIT growth across all segments. On the established front organic revenue increased by 16.9%, led by revenue-per-case expansion and a resilient volume performance in key markets; organic EBIT grew 20.8%.  In developing countries organic revenue up 23.6%, driven by revenue-per-case expansion while organic EBIT was up 27.2%. On emerging territories organic revenue up 16.0%, despite pressure on consumer spending from macro headwinds in several markets with organic EBIT growing 13.9%.

·        EBITDA landed 15.3% higher to €765.6mn vs €663.8mn in H1:22 with the respective margin shaping at 15.2% vs 15.8% a year earlier.

·        Lower net finance costs led net income growth to exceed expectation growing by 152.3%, 9.1% ahead to €385.7mn vs €152.9mn. Comparable net profit up 22.7% to €388.9mn.

·        CAPEX at €238.8mn, up €39.1mn with FCF €76.3mn lower y-o-y to €256.60mn on adverse WC requirements and higher CAPEX.

·        Financial targets for the medium term period reiterated calling for average annual organic revenue growth of 6-7% (previously 5-6%), average annual organic EBIT margin expansion of 20-40 basis points per annum and continuously growing ROIC.

·        For FY:23 CCHBC expects mid-teens full-year organic revenue growth, COGS/case increases by high-single digits in 2023 (previously low teens), as inflationary pressures begin to moderate and organic EBIT growth in the range of 9% to 12% (as upgraded in early July). €45 million benefit in EBIT, resulting from the consolidation of Multon (from 11 August 2022) and the acquisition of Three Cents (from 21 October 2022). The impact of translational FX in Group comparable EBIT to remain at €50-60mn headwind. No restructuring initiatives in 2023. Comparable effective tax rate to be at the top end of our 25% to 27% range. Net finance costs for 2023 to be between the range of €65-75mn (previously similar to 2022 is €82.7mn).

·        In the CC the company did not exclude further acquisitions in H2:23, following Finladia acquisition in June while it projected that growth rates will deccelerate in H2.

·        Overall a sound performance for the group in H1:23 with continued investment in 24/7 portfolio and strategic priorities bearing fruits both in profitability terms and M/S gains.

The following table summarizes CCHBC’s H1:23 financial performance vs consensus estimates:

Alpha Bank (Q2:23 results CC highlights): NPE ratio to reach 6.5% by end 2023 (€2.8bn in H1:23 or 7.6%), 4% in 2025. New NPE’s securitization €700mn. Dividend for FY:23. RoTE in excess of targeted 11%, EPS>0.29/share. CET1 at 14%. Cost to Income ratio to further drop by 16% over the 2023-2025 period. Wealth Management CAGR 13%. Wholesale banking CAGR 4%. International activities profitability +15%. New loans in Q2:23 €2bn with spread above 3% but 0.5% lower vs Q1:23. CoR at 80bps. Reportedly the bank will acquire a minority 5% stake in PRODEA REIT.

The following table summarize Alpha Bank’s Q2:23 financial performance:

  PETROPOULOS (H1:23 results): Gross debt up to €18.73mn from €9.63mn while net debt at €7.87mn from Net cash €0.96mn as of end 2022.