Today’s Headlines
· Greek HICP up in July (Eurostat)
· Greek unemployment drops to 9.6% in June
· Retail Sales up in May (ELSTAT)
· Greece sells 3-month T-bills at 3.23%
· Optima bank | 1H2024 net profit jumped 57% y-o-y, Management upgraded FY Guidance
· Piraeus Financial Holdings 2Q2024 Review | Robust 1H drives FY RoaTBV higher
· Eurobank Holdings 2Q2024 Review | A strong quarter, management upgraded FY guidance
· Titan Cement 2Q/1H24e Results Review | Strong Results, above consensus and slightly above Optima, positive outlook for 2H24, US IPO expected in 1Q25e
· National Bank of Greece 2Q2024 Preview | A strong quarter points to FY target upgrade, Buy
· Alpha Services & Holdings A soft quarter on lower NII, non-core revenues and NPA loss
· Court of Audit gives the green light for the signing of the Attiki Odos concession
· Noval Property received a new LEED Gold environmental certification
Market Comment
ATHEX headed north yesterday outperforming the European stock markets. In more detail, the General Index jumped by 1.21% at 1,478.17 units (FTSE Large Cap: +1.45%, FTSE Mid Cap: +0.21% Banks Index: +2.15%) and the traded value was shaped at EUR 132.4m, up from Tuesday’s EUR 82.8m. We expect the positive momentum to continue today, with Optima bank, Eurobank and National Bank in the spotlight.
Macro Headlines
Greek HICP up in July (Eurostat)
According to a flash estimate from Eurostat, Greek annual inflation is expected to shape at 3.0% in July, up compared to the 2.5% recorded in June also above the respective EU area figure (up to 2.6% in July from 2.5% in June).
Greek unemployment drops to 9.6% in June
ELSTAT announced that the seasonally adjusted unemployment rate came in at 9.6% in June 2024, lower than the downwards revised 10.3% in May 2024 and lower than 11.4% in June 2023. The number of unemployed persons amounted to 456,663, lower by 0.6% y-o-y and by 0.4% m-o-m.
Retail Sales up in May (ELSTAT)
According to the Hellenic Statistical Authority, retail sales (excluding automotive fuel) increased by 13.6% y-o-y in May 2024 (while also increased by 10.3% y-o-y in volume terms), while including automotive fuel, retail sales increased by 14.3% y-o-y. Per main store category, the turnover of the Food sector increased by 16.4% y-o-y, sales volume were up by (13.8% y-o-y), while Non-food sector (except automotive fuel) sales increased by 11.4% y-o-y with sales volume up by 7.3% y-o-y. Finally, the turnover of the Automotive fuel sector increased by 17.7% y-o-y, with sales volume up by 11.7% y-o-y.
Greece sells 3-month T-bills at 3.23%
The Greek State raised EUR 600m yesterday from the issuance of 13–week T-bills. In more detail, the total amount auctioned was EUR 500m, while total bids reache EUR 1,200m (2.40x coverage ratio vs. 2.20x in the previous auction) for an interest rate of 3.23% (vs. 3.42% in the previous auction).
Company Headlines
Optima bank || Restricted | CP: EUR 12.24 | TP: Restricted
1H2024 net profit jumped 57% y-o-y, Management upgraded FY Guidance
P & L: Net profit came in at EUR 36.3m in 2Q24 (+11% q-o-q, +41% y-o-y) and at EUR 69.0m (+57% y-o-y) in 1H24. RoTE widened further to 27.2% in 2Q24 from 25.4% in 1Q24 and also stood at 26.7% in 1H24. Net interest income reached EUR 47.0m in 2Q24 (+6% q-o-q, +41% y-o-y) and EUR 91.5m (+51% y-o-y) in 1H24. NIM narrowed to 4.36% vs. 4.48% in 1Q24. Fee income came in at EUR 9.3m (-5% q-o-q, +24% y-o-y) in 2Q24 and at EUR 19.1m (+34% y-o-y) in 1H24. Pre provision income landed at EUR 49.8m (+11% q-o-q, +51% y-o-y) in 2Q24 and at EUR 94.8m (+61% y-o-y) in 1H24. Loan loss provisions stood at EUR 2.4m (-49% q-o-q, +100% y-o-y) in 2Q24 and at EUR 7.2m (+33% y-o-y) in 1H24.
New Guidance: Management revised upwards 2024 guidance and now expects net profit to exceed EUR 134m from EUR >124m previously and RoTE to surpass 24% from >20% in the previous guidance.
Balance sheet: Gross Loans reached EUR 3.06bn (+10% q-o-q, +50% y-o-y), deposits at EUR 3.7bn (+12% q-o-q, +34% y-o-y) and assets at EUR 4.5bn (+11% q-o-q, +41% y-o-y). Group NPEs came in at EUR 31.6m from EUR 31.0m in 1Q24 and the NPE ratio squeezed to 1.03% from 1.11% in 1Q24. Tangible equity increased by EUR 4.5m q-o-q to EUR 536.9m, including dividend distribution on 25 June. FL CET1 and CAD ratios stood at 15.82% vs. 15.90% in 1Q24.
Conference call: A conference call will follow today at 18:00 Athens/16:00 London Time. Dial-in numbers- GR: +30 210 94 60 800 or +30 213 009 7000, UK & INTL:+44 (0) 800 368 1063,+44 (0) 203 059 5872, US: +1 516 447 5632.
|
(EUR m) |
2Q24 |
1Q24 |
QoQ |
2Q23 |
YoY |
1H24 |
1H23 |
YoY |
|
Net Interest Income |
47.0 |
44.5 |
6% |
33.4 |
41% |
91.5 |
60.7 |
51% |
|
Fee income |
9.3 |
9.8 |
-5% |
7.5 |
24% |
19.1 |
14.3 |
34% |
|
Core income |
56.3 |
54.3 |
4% |
41.0 |
37% |
110.6 |
75.0 |
47% |
|
Non-core Revenues |
6.1 |
4.8 |
27% |
4.3 |
42% |
10.9 |
8.4 |
30% |
|
Total revenues |
62.5 |
59.0 |
6% |
45.3 |
38% |
121.5 |
83.5 |
46% |
|
Operating Expenses |
(12.5) |
(14.1) |
-11% |
(12.3) |
2% |
(26.6) |
(24.1) |
10% |
|
Pre Provision Profit |
49.8 |
44.9 |
11% |
33.0 |
51% |
94.8 |
58.8 |
61% |
|
LLPs |
(2.4) |
(4.7) |
-49% |
(1.2) |
100% |
(7.2) |
(5.4) |
33% |
|
Reported net profit |
36.3 |
32.7 |
11% |
25.7 |
41% |
69.0 |
44.1 |
56% |
source: Optima Bank
Piraeus Financial Holdings || BUY | CP: EUR 3.90 | TP: EUR 5.50
2Q2024 Review | Robust 1H drives FY RoaTBV higher
Optima View | Piraeus delivered a robust set of 2Q24 results that beat Optima and consensus estimates across all lines. Following the release of 2Q24 results, we’ll upgrade our estimates and TP. The stock is trading 0.66x P/TBV24E, at a deep 44% discount to European banks, despite its higher RoaTBV profile (17.9% in 1H24 vs. 13.4% of EU banks). Piraeus is one of our top picks in the sector and we reiterate our Buy rating.
New guidance | Management upgraded FY guidance on 05 June and following the robust 2Q24 results, it now expects normalized net profit to exceed EUR 1.06bn and normalized EPS of more than 0.85 and RoaTBV of >16% from 15% previously, on higher performing loans (>EUR 31.7bn) and fee income generation (0.8% of assets).
2Q2024 results | 2Q24 reported net profit came in at EUR 330.0m (+42% q-o-q, +176% y-o-y), well above Optima estimate of EUR 281.5m (+17%) and consensus estimate of EUR 281.0m. NII was shaped at EUR 527.6m (+2% q-o-q, +8% y-o-y), 4% higher than Optima and consensus estimates. NIM widened by 3bps q-o-q to 2.74% on higher PE yield (+6bps q-o-q) and flat deposits cost (0.54%). Fee income grew to a record 179.2m (+23% q-o-q, +27% y-o-y), well above Optima and consensus estimates. Total revenues reached EUR 726.0m (+23% q-o-q, +10% y-o-y), higher than Optima (+11%) and consensus (+9%) estimates. OpEx stood at EUR 203.3m (+0.4% q-o-q, +1% y-o-y). Normalized net profit (excluding one-offs) was shaped at EUR 333.1m (+19% q-o-q, +40% y-o-y).
1H2024 results | Reported net profit skyrocketed by 88% y-o-y to EUR 563.1m, 10% above Optima and consensus estimates. Normalized net profit jumped by 39% y-o-y to a record EUR 612.4m, 8% above Optima and consensus estimates.
Balance sheet | Performing loans came in at EUR ca31.3bn (EUR +1.29bn q-o-q vs. FY target of EUR 1.6bn) and deposits at EUR 59.8bn (EUR +1.17bn q-o-q). Time deposits reached EUR 13.5bn (EUR +236m q-o-q) and accounted for 22.7% of the deposit base. Investment securities also increased by EUR 615.4m q-o-q to EUR ca15.6bn. Piraeus repaid EUR 2.5bn TLTRO funding in June and the remaining EUR 1.0bn matures in December. MREL ratio reached 28.3%, above final MREL requirement of 27.9% in December 2025.
Asset quality | LLPs reached EUR 43.3m (-26% q-o-q, -85% y-o-y) and organic CoR was shaped at 46bps, lower than FY guidance of 70bps. Organic NPE formation was slightly negative (EUR -26m) and hence group NPEs narrowed by EUR 39m q-o-q to EUR 1.26bn. The NPE ratio squeezed by 20bps q-o-q to 3.3% and the NPE cash coverage squeezed to 58.8% from 60.2% in 1Q24.
Capital | Tangible equity rose by EUR 193m q-o-q to EUR ca6.78bn and TBVPS increased to EUR 5.42 vs. EUR 5.27 in 1Q24. Pro-forma FL CET1 widened further to 14.2% (+50bps), post distribution accrual of 30%.
Table 1 | Quarterly Group P&L | Actual vs. Forecasts
|
(EUR m) |
2Q24 |
1Q24 |
QoQ |
2Q23 |
YoY |
vs Optima |
vs Consensus |
|
Net Interest Income |
527.6 |
517.6 |
2% |
487.8 |
8% |
4% |
4% |
|
Fee income |
179.2 |
145.3 |
23% |
141.4 |
27% |
19% |
22% |
|
Core income |
706.8 |
662.9 |
7% |
629.2 |
12% |
8% |
8% |
|
Non-core Revenues |
19.2 |
(71.1) |
– |
32.8 |
-41% |
– |
75% |
|
Total revenues |
726.0 |
591.9 |
23% |
662.0 |
10% |
11% |
9% |
|
Operating Expenses |
(203.3) |
(202.4) |
0% |
(201.2) |
1% |
3% |
0% |
|
Pre Provision Profit |
522.8 |
389.4 |
34% |
460.8 |
13% |
14% |
13% |
|
LLPs (inc, associates income) |
(70.6) |
(64.5) |
9% |
(283.0) |
-75% |
9% |
-8% |
|
Reported Net Profit |
330.0 |
232.8 |
42% |
119.7 |
176% |
17% |
17% |
|
Normalized Net Profit* |
333.1 |
279.3 |
19% |
238.1 |
40% |
16% |
16% |
source: Company, Optima Bank estimates, Median Consensus estimates-Company
*Net profit excluding one-off gains, inorganic LLPs and one-off costs
Table 2 | Interim Group P&L | Actual vs. Forecasts
|
(EUR m) |
1H24 |
1H23 |
YoY |
vs Optima |
vs Consensus |
|
Net Interest Income |
1,045.2 |
934.7 |
12% |
2% |
2% |
|
Fee income |
324.6 |
263.1 |
23% |
10% |
11% |
|
Core income |
1,369.7 |
1,197.7 |
14% |
4% |
4% |
|
Non-core Revenues |
(51.9) |
41.0 |
-226% |
-27% |
-14% |
|
Total revenues |
1,317.9 |
1,238.8 |
6% |
6% |
5% |
|
Operating Expenses |
(405.7) |
(407.2) |
0% |
1% |
0% |
|
Pre Provision Profit |
912.2 |
831.5 |
10% |
8% |
7% |
|
LLPs (inc, associates income) |
(135.1) |
(443.4) |
-70% |
4% |
-5% |
|
Reported Net Profit |
563.1 |
299.4 |
88% |
10% |
10% |
|
Normalized Net Profit* |
612.4 |
441.8 |
39% |
8% |
8% |
source: Company, Optima Bank estimates, Median Consensus estimates-Company
*Net profit excluding one-off gains, inorganic LLPs and one-off costs
Eurobank Holdings || BUY | CP: EUR 2.1180 | TP: EUR 2.41
2Q2024 Review | A strong quarter, management upgraded FY guidance
Optima View | Eurobank delivered a strong set of 2Q24 results that beat Optima and consensus estimates on marginally higher NII, higher fee income and lower LLPs. We reiterate our Buy rating and following the strong set of results and guidance upgrade, we’ll revise upwards our estimates and Target Price.
New guidance | Management upgraded FY guidance and now expects core operating profit to grow by more than 7% and to exceed EUR 1.6bn, adjusted RoTBV to widen to 16.5% from 15.0% in the previous guidance in March, the NPE ratio to squeeze further to 3.0% from <3.5% in the previous guidance in March and 3.5% in 2023 and new CoR guidance of 70bps vs. 80bps in March. We believe that the new FY targets are feasible and conservative, given the strong 1H24 performance.
|
2024 Financial goals |
Jun-24 |
Mar-24 |
% |
2023 |
YoY |
|
Core operating profit (EUR bn) |
>1.6 |
>1.5 |
>7% |
1.47 |
>9% |
|
Adj. RoTBV |
16.5% |
15.0% |
– |
18.1% |
– |
|
TBVPS (EUR) |
2.35 |
2.30 |
2.2% |
2.07 |
14% |
|
CET1 |
>17% |
>17% |
– |
17% |
|
|
NPE ratio |
3.0% |
<3.5% |
3.5% |
source: Eurobank
2Q2024 results | Adjusted net profit (before one-offs) came in at EUR 348.5m (-9% q-o-q, +2% y-o-y) in 2Q24, 8% above Optima estimate of EUR 323.7m and consensus estimate of EUR 322.2m. Reported net profit reached EUR 434.0m (+51% q-o-q) in 2Q24, including EUR 111m negative goodwill from the increase of the stake in Hellenic Bank in 2Q. RoTBV stood at 17.3% vs. 19.9% in 1Q24. Net interest income was shaped at EUR 560.9m in 2Q24 (-2% q-o-q, +4% y-o-y), slightly above Optima estimate of EUR 554.4m and consensus estimate of EUR 551.0m. NIM squeezed by 8bps q-o-q to 2.79%. Fee income reached EUR 147.1m (+8% q-o-q, +5% y-o-y), 4% above Optima and 3% above consensus estimates. Non-core revenues posted a loss of EUR 2.1m against a gain of EUR 47.7m in 1Q24. Total revenues came in at EUR 705.9m (-6% q-o-q, -1% y-o-y), in line with Optima and consensus estimates. Opex stood at EUR 228.4m, flat q-o-q, in line with Optima estimate. Pre-provision income came in at EUR 477.5m (-9% q-o-q), 2% above Optima estimate of EUR 469.1m and consensus estimate of EUR 467.2m. Loan loss provisions amounted to EUR 72.7m in 2Q24 (+3% q-o-q), 8% below Optima estimate of EUR 78.9m and 7% below consensus estimate of EUR 78.0m.
1H2024 results | Adjusted net profit (before one-offs) soared by 22% y-o-y to EUR 731.6m, 4% above Optima and consensus estimates. International operations adjusted net profit reached EUR 277.2m and accounted for 38% of group’s profit. Reported net profit rose by 5% y-o-y to EUR 721.3m. RoTBV widened to 18.5% from 17.9% in 1H23.
Balance sheet | Performing loans came in at EUR 42.2bn (EUR +600m q-o-q) and deposits at EUR 58.7bn (EUR +1.35bn q-o-q). Time deposits reached EUR 21.5bn (EUR +874m q-o-q) and accounted for 36.6% of the deposit base.
Asset quality | Loan loss provisions amounted to EUR 72.7m in 2Q24 (+3% q-o-q), 8% below Optima estimate of EUR 78.9m and 7% below consensus estimate of EUR 78.0m and CoR was shaped at 69bps, lower than FY guidance of 80bps. Organic NPE formation was positive (EUR +66m in 2Q24 and +125m in 1H24) and hence group NPEs rose by EUR 61m q-o-q to EUR 1.3bn. The NPE ratio widened by 10bps q-o-q to 3.1% and the NPE cash coverage to 93.2% from 92.6% in 1Q24.
Capital | Tangible equity rose by EUR 417m q-o-q to EUR 8.26bn and TBVPS increased to EUR 2.25 vs. EUR 2.14 in 1Q24. Pro-forma FL CET1 widened further to 16.2%, post dividend distribution.
Hellenic Bank | Eurobank announced that following the termination of the acceptance period of its takeover bid for Hellenic Bank, it controlled on 30 July a 55.481% stake or 229,030,025 common shares. Hellenic Bank will be consolidated line by line from 3Q24 onwards. The ultimate objective is to merger Hellenic Bank with Eurobank Cyprus. Management will present the new BP over 2025e-2027e in early 2025 with FY2024 results.
Conference call highlights
§ Higher RoTBV target is attributed to a) higher NII by EUR 100m-120m and NIM between 270-275bps, b) lower CoR by 10bps, c) higher income from Hellenic Bank and d) higher other op. income based on 1H performance.
§ Time depos are expected to account for 35% of the deposit base versus 40% previously.
§ The NPE ratio is expected to narrow to 3.0% in 2024 due to write-offs.
§ Tax rate is expected at 22% for the year.
§ They plan some acquisitions in asset management both in Greece and abroad. Asset management FY goals have already been met.
§ Cost of hedging at EUR 27m in 1H24 and at EUR 6m in 2Q24, average maturity of the book is 5 years, sensitivity for 25bps further cuts than expected EUR +25m positive impact on NII.
§ Stick to low single digit growth in OpEx.
Quarterly Group P&L | Actual vs. Forecasts
|
(EUR m) |
2Q24 |
1Q24 |
QoQ |
2Q23 |
YoY |
vs Optima |
vs Consensus |
|
Net Interest Income |
560.9 |
571.1 |
-2% |
540.1 |
4% |
1% |
2% |
|
Fee income |
147.1 |
135.6 |
8% |
140.6 |
5% |
4% |
3% |
|
Core income |
708.0 |
706.7 |
0% |
680.7 |
4% |
2% |
2% |
|
Non-core Revenues |
(2.1) |
47.7 |
-104% |
30.9 |
-107% |
-205% |
-142% |
|
Total revenues |
705.9 |
754.4 |
-6% |
711.6 |
-1% |
1% |
1% |
|
Operating Expenses |
(228.4) |
(228.8) |
0% |
(221.8) |
3% |
0% |
-1% |
|
Pre Provision Profit |
477.5 |
525.6 |
-9% |
489.8 |
-3% |
2% |
2% |
|
Loan impairments |
(72.7) |
(70.9) |
3% |
(89.2) |
-19% |
-8% |
-7% |
|
Adjusted Net Profit (before one-offs) |
348.5 |
383.1 |
-9% |
343.2 |
2% |
8% |
8% |
source: Company, Optima Bank estimates, Median Consensus estimates-Company
Interim Group P&L | Actual vs. Forecasts
|
(EUR m) |
1H24 |
1H23 |
YoY |
vs Optima |
vs Consensus |
|
Net Interest Income |
1,132.0 |
1042.6 |
9% |
1% |
1% |
|
Fee income |
282.7 |
269.9 |
5% |
2% |
2% |
|
Core income |
1,414.7 |
1,312.5 |
8% |
1% |
1% |
|
Non-core Revenues |
45.6 |
18.7 |
144% |
-8% |
-13% |
|
Total revenues |
1,460.3 |
1331.2 |
10% |
1% |
1% |
|
Operating Expenses |
(457.2) |
(443.3) |
3% |
0% |
0% |
|
Pre Provision Profit |
1,003.1 |
887.9 |
13% |
1% |
1% |
|
Loan impairments |
(143.6) |
(164.3) |
-13% |
-4% |
-4% |
|
Adjusted Net Profit (before one-offs) |
731.6 |
598.5 |
22% |
4% |
4% |
source: Company, Optima Bank estimates, Median Consensus estimates-Company
Titan Cement || BUY | CP EUR 32.90 | TP EUR 33.90
2Q/1H24e Results Review | Strong Results, above consensus and slightly above Optima, positive outlook for 2H24, US IPO expected in 1Q25e
Titan Cement International (TCI) reported increased by 6.1% y-o-y turnover at EUR 1,323m for 1H24 (beating slightly our and consensus estimates), while EBITDA margin expansion of 167bps drove EBITDA up by 16.7% y-o-y to EUR 281.4m (slightly above our call and 5.2% above consensus). Further down the P&L, reported net income jumped to EUR 148.7m (up by 18.4% y-o-y), above our EUR 141.2m and well above consensus EUR 137.6m estimates, aided by the lower by EUR 11.75m y-o-y net financial costs (note that 1H23 financials were burdened by EUR 8m FX losses). Operating Cash Flow posted seasonal quarterly inflows of EUR 184.5m, up by EUR 11m y-o-y and accounting for investing outflows at EUR 116m (flattish y-o-y), Group net debt closed at EUR 640m, down by EUR 20m y-t-d ad by EUR 122m y-o-y, at a comfortable 1.1x Net Debt/EBITDA leverage ratio. The company says that the outlook for the rest of the year remains positive, driven by volume growth and resilient pricing in the US and Europe. Additionally, Titan said that the US listing is progressing according to schedule, with the IPO expected to take place in 1Q25. Finally, Titan decided the initiation of a new share buyback program, again for a total value of up to EUR 20m, which will replace the current one upon its termination at the end of August 2024. The Company will hold a conference call today (16.00 Athens time, Greek participants: +30 213 009 6000 or +30 210 94 60 800 UK participants: +44 (0) 800 368 1063 USA participants: +1 516 447 5632).
Titan Cement 2Q/1H24 Group Key P&L Results
|
1H23 |
1H24 |
Y-o-Y change |
Optima |
Actual vs. Optima |
Consensus |
Actual vs. Consensus |
2Q23 |
2Q24e |
Y-o-Y change |
||||||||||||
|
Turnover |
1,229.10 |
1,323.0 |
7.6% |
1,295.80 |
2.1% |
1,297.50 |
2.0% |
641.1 |
699.3 |
9.1% |
|||||||||||
|
Greece |
197.3 |
218.5 |
10.7% |
211.9 |
3.1% |
103.5 |
115 |
11.1% |
|||||||||||||
|
USA |
735.5 |
774.6 |
5.3% |
758.6 |
2.1% |
372.6 |
404 |
8.4% |
|||||||||||||
|
SEE |
195.1 |
215.4 |
10.4% |
214 |
0.7% |
111.3 |
120.4 |
8.2% |
|||||||||||||
|
E.MED |
101 |
114.5 |
13.4% |
111.3 |
2.9% |
53.5 |
59.9 |
12.0% |
|||||||||||||
|
EBITDA |
241.2 |
281.4 |
16.7% |
273.6 |
2.9% |
267.6 |
5.2% |
133.9 |
171.7 |
28.2% |
|||||||||||
|
EBITDA margin |
19.60% |
21.27% |
167 |
21.10% |
17 |
20.62% |
65 |
20.90% |
24.40% |
350 |
|||||||||||
|
Greece |
36.3 |
30.9 |
-14.9% |
29.2 |
5.8% |
18.8 |
19.1 |
1.6% |
|||||||||||||
|
USA |
135.5 |
164.1 |
21.1% |
157.2 |
4.4% |
69.2 |
101.9 |
47.3% |
|||||||||||||
|
SEE |
60 |
82.8 |
38.0% |
81.9 |
1.1% |
42 |
49.9 |
18.8% |
|||||||||||||
|
E.MED |
9.3 |
3.7 |
-60.2% |
5.3 |
-30.2% |
3.9 |
0.8 |
-79.5% |
|||||||||||||
|
Net income (adj.) |
110.9 |
148.7 |
34.1% |
141.2 |
5.3% |
137.6 |
8.1% |
66.5 |
96.3 |
44.8% |
Source: Optima bank, The Company
Consensus estimates are compiled by 10 Analysts and provided by the Company
Conference call highlights-limited newsflow: a) US IPO progresses according to schedule, no investor day event to be hosted before the completion of the IPO, b) US infrastructure activity more than offset the softer residential demand in the country during 1H24, c) Titan US is expects pick-up if the housing market after the de-escalation of the FED rates, d) Capex for 2024e at EUR 240m, high also in 2025e, e) intends to gradually increase dividends, in line with profitability growth
Comment: Strong first half for Titan, despite adversities (adverse weather in the USA, maintenance in the US plants, elevated electricity costs in Greece), on a tough comparables on a very strong 2023. That said, and taking into account a) the positive outlook for 2H24, b) the IPO of the US operations in the New York stock market and c) the attractive valuation of the stock at current levels (24-27% discount compared to EU peers and >60% compared to US in P/E terms), we reiterate our Buy recommendation of the stock, and we will soon revert for updated estimates and Target Price.
Relative Valuation
|
Titan Cement Peer Group Valuation |
|
PE |
EV/EBITDA |
DY |
|||||||||||
|
Company |
Price € |
FY 2024 |
FY 2025 |
FY 2024 |
FY 2025 |
FY 2024 |
FY 2025 |
||||||||
|
HOLCIM LTD |
86.05 |
12.7x |
11.6x |
8.3x |
7.8x |
3.8% |
4.1% |
||||||||
|
CEMENTOS MOLINS SA |
22.40 |
10.3x |
11.0x |
4.9x |
5.3x |
3.9% |
3.6% |
||||||||
|
CEMEX SAB-CPO |
0.58 |
7.6x |
6.3x |
5.1x |
4.8x |
9.3% |
3.4% |
||||||||
|
HEIDELBERG MATERIALS AG |
96.78 |
7.8x |
7.0x |
5.3x |
5.0x |
3.6% |
4.0% |
||||||||
|
BUZZI SPA |
36.46 |
7.6x |
7.5x |
5.3x |
5.2x |
2.0% |
2.1% |
||||||||
|
IBSTOCK PLC |
2.22 |
17.0x |
13.8x |
8.8x |
7.8x |
3.1% |
3.6% |
||||||||
|
VICAT |
32.10 |
5.4x |
5.0x |
4.2x |
4.1x |
6.2% |
6.2% |
||||||||
|
CEMENTOS ARGOS SA |
1.90 |
11.3x |
9.7x |
8.6x |
7.7x |
3.5% |
1.9% |
||||||||
|
CEMENTIR HOLDING NV |
10.54 |
8.6x |
8.2x |
4.4x |
4.2x |
2.9% |
3.0% |
||||||||
|
TAIWAN CEMENT |
0.98 |
21.5x |
21.0x |
12.9x |
12.2x |
3.4% |
3.0% |
||||||||
|
SEMEN INDONESIA PERSERO TBK |
0.22 |
10.1x |
8.8x |
4.6x |
4.4x |
4.6% |
4.7% |
||||||||
|
Non US Peer Group average |
|
10.9x |
10.0x |
6.6x |
6.2x |
4.2% |
3.6% |
||||||||
|
VULCAN MATERIALS CO |
249.72 |
27.5x |
24.6x |
15.8x |
14.7x |
0.7% |
0.7% |
||||||||
|
MARTIN MARIETTA MATERIALS |
541.08 |
24.5x |
22.1x |
14.7x |
13.8x |
0.5% |
0.6% |
||||||||
|
EAGLE MATERIALS INC |
245.65 |
15.4x |
14.6x |
10.5x |
10.6x |
0.4% |
0.4% |
||||||||
|
US Peer Group average |
|
22.5x |
20.4x |
13.7x |
13.0x |
0.5% |
0.6% |
||||||||
|
TITAN CEMENT |
32.25 |
7.9x |
7.6x |
5.5x |
5.3x |
3.3% |
3.5% |
||||||||
|
prem. (+) / disc. (-) vs. Non US Peers |
|
-27.1% |
-24.2% |
-16.4% |
-14.8% |
|
|
||||||||
|
prem. (+) / disc. (-) vs. US Peers |
|
-64.7% |
-63.0% |
-59.7% |
-59.3% |
|
|
||||||||
|
Source: Optima Research, Bloomberg 31/07/2024 |
|
|
|
|
|
|
|||||||||
Regional Performance
Greece: Greece recorded a very strong first semester with volumes of domestic cement, aggregates, ready-mix and mortars, all increasing at a double-digit level, however, increased electricity costs impacted profitability. Consequently, 1H24 sales rose by 10.7% y-o-y to 218.5m, resulting however in EBITDA of EUR 30.9m from EUR 36.3m in 1H23.
US: Performance of TITAN US during 1H24 was stellar, characterized by solid topline growth and robust profitability, despite the unfavorable weather across the country. In this context, US sales advanced by 5.3% y-o-y to EUR 774.6m, while EBITDA rose by 21.1% y-o-y to EUR 164.1m, offsetting any negative impact from maintenance costs.
SEE Europe: Regional resilient demand, with healthy volume sales growth and easing costs, mainly energy, allowed the Group to record turnover up by 10.4% y-o-y to EUR 215.4m in 1H24, while the cost efficiency improvements, drove segmental EBITDA expansion by 38% YoY to EUR 82.8m.
EMED: Titan recorded significant sales growth in the region, however profitability was hit by currency weaknesses and macro weakness in Egypt. Against this backdrop, turnover rose by 13.4% y-o-y to EUR 114.5m, while EBITDA in 1H24 was down by 60.2% y-o-y tot EUR 3.7m.
Below the EBITDA line: Below EBITDA: Contribution from participations (mainly Brazil JV) in 1H24 was negative at EUR 1.4m from EUR -1.6m in 1H23, depreciation expenses stood at EUR 77.5m (+7.2% y-o-y), financial expenses (including FX impact) ended lower at EUR 13.6m (down by EUR 11.75m y-o-y), while the effective tax rate shaped at 20%. Operating Free Cash Flow posted seasonal quarterly inflows of EUR 184m, while Group net debt closed at EUR 640m, down by EUR 20m y-t-d, at a comfortable 1.1x Net Debt/EBITDA leverage ratio.
National Bank of Greece || BUY | CP: EUR 8.11 | TP: EUR 10.84
2Q2024 Preview | A strong quarter points to FY target upgrade, Buy
Optima View | National Bank of Greece is set to report 2Q/1H24 results today, before market opening and management will host a conference call on the same day at 10:30 Athens/ 08:30 London Time. We expect another strong quarter, on the back of efficient cost control and despite the sequential drop in NII. We also expect performing loans and deposits to be higher q-o-q and asset quality trends to remain positive. Given the strong 1H24 performance, we expect management to upgrade its core FY PAT target of EUR 1.2bn. The stock is trading 0.98x P/TBV24e, at 13% discount to its European peers. Nonetheless, we believe it should trade at a premium, given its higher RoaTBV profile (15.7% in 24e vs. 13.4% of EU banks). We reiterate our Buy rating and TP of EUR 10.84/share, implying a 29.8% upside potential.
1H2024 Preview | We estimate that net profit will shape at EUR 660.3m (+25% y-o-y), in line with consensus estimate of EUR 661.6m on the back of higher NII (+13% y-o-y), fee income (+13% y-o-y) and lower LLPs and other impairments (-6% y-o-y). Our core PAT estimate of EUR 654.4m suggests that NBG will beat FY target of EUR 1.2bn.
2Q24 Preview | We forecast that net profit will reach EUR 302.2m (-16% q-o-q, +12% y-o-y) in 2Q24, in line with consensus estimate of EUR 303.5m. In more detail, we estimate NII to stand at EUR 584.5m (-3% q-o-q, +5% y-o-y), in line with consensus estimate of EUR 581.8m. We also project fee income to shape at EUR 101.0m (+1% q-o-q, +10% y-o-y), supported by positive net credit expansion and market conditions in the quarter. Thus, core income is expected to reach EUR 685.5m (-3% q-o-q, +6% y-o-y). We also expect non-core revenues to drop to just EUR 1.0m from EUR 59.8m in 1Q24. All in all, we anticipate total revenues to reach EUR 686.5m (-10% q-o-q, +5% y-o-y), in line with consensus estimate of EUR 687.7m. On the side, we forecast OpEx to increase slightly to EUR 211.9m (+1% q-o-q, +7% y-o-y), in line with consensus estimate of EUR 212.1m. Finally, we project LLP and other impairments to come in at EUR 57.9m (+5% q-o-q, +3% y-o-y), assuming an organic CoR of 58bps for the quarter.
|
(EUR m) |
Optima 2Q24e |
1Q24 |
QoQ |
YoY |
Cons 2Q24e |
QoQ |
Optima vs Cons |
|
|
Net Interest Income |
584.5 |
605.5 |
-3% |
5% |
581.8 |
-4% |
0.5% |
|
|
Fee income |
101.0 |
99.6 |
1% |
10% |
101.9 |
2% |
-0.9% |
|
|
Core income |
685.5 |
705.1 |
-3% |
6% |
683.7 |
-3% |
0.3% |
|
|
Non-core Revenues |
1.0 |
59.8 |
-98% |
-84% |
4.0 |
-93% |
-75.0% |
|
|
Total revenues |
686.5 |
764.9 |
-10% |
5% |
687.7 |
-10% |
-0.2% |
|
|
Operating Expenses |
(211.9) |
(210.8) |
1% |
7% |
(212.1) |
1% |
-0.1% |
|
|
Pre Provision Profit |
474.6 |
554.1 |
-14% |
5% |
475.6 |
-14% |
-0.2% |
|
|
LLP and other impairments |
(57.9) |
(55.1) |
5% |
3% |
(55.0) |
0% |
5.2% |
|
|
Reported Net Profit |
302.2 |
358.1 |
-16% |
12% |
303.5 |
-15% |
-0.4% |
source: Optima bank estimates, Company Median consensus estimate
Alpha Services & Holdings || BUY | CP: EUR 1.7030 | TP: EUR 2.10
A soft quarter on lower NII, non-core revenues and NPA loss
Optima View | Alpha Services & Holdings is scheduled to report 2Q/1H2024 results on Friday 02 August, at 08:00 Athens/06:00 London time and management will host a conference call on the same day at 12:00 Athens/10:00 London time. We anticipate a soft quarter, on lower NII, non-core revenues and NPE clean-up costs. We also expect performing loans and deposits to be flattish q-o-q and asset quality trends to remain positive. The stock is trading 0.59x P/TBV24e, at a deep 49% discount to European peers and reiterate our Buy rating and TP of EUR 2.10/share, implying a 26.5% upside potential. Following the release of results, we’ll update our estimates, recommendation and TP.
1H2024 Preview | We project 1H24 reported net profit to shape at EUR 343.8m (+14% y-o-y), 3% lower than consensus estimate of EUR 353.1m. We forecast NII to reach EUR 819.5m (+5% y-o-y), slightly lower than consensus estimate of EUR 825.2m and total revenues to stand at EUR 1.08bn (+8% y-o-y), in line with consensus. On the cost side, we assess that OpEx will narrow by 2% y-o-y to EUR 412.3m and loan loss provisions by 10% y-o-y to EUR 130.7m, 4% lower than consensus estimate of EUR 135.9m.
2Q2024 Preview | We estimate 2Q24 reported net profit to shape at EUR 132.6m (-37% q-o-q, -31% y-o-y). In more detail, we estimate net interest income to shape at EUR 399.3m (-5% q-o-q, +1% y-o-y), slightly lower than consensus estimate of EUR 405.0m. The sequential drop is attributed on one hand to lower Euribor rate and on the other to higher deposit and wholesale funding costs as well as to hedging cost. We also forecast fee income to rise by 2% q-o-q and 8% y-o-y to EUR 98.0, in line with consensus estimate. Thus, we project core income to stand at EUR 497.3m (-4% q-o-q, +2% y-o-y), slightly lower than consensus estimate of EUR 503.0m and non-core revenues to reach EUR 25.0m vs. EUR 43.5m in 1Q24. Total revenues are expected to come in at EUR 522.3m (-7% q-o-q, 0% y-o-y), broadly in line with consensus estimate of EUR 526.0m. On the cost side, we forecast OpEx to stand at EUR 208.6m (+2% q-o-q, -3% y-o-y), in line with consensus estimate of EUR 210.0m. Hence, we project pre-provision income to reach EUR 313.7m (-12% q-o-q, +2% y-o-y), slightly lower than consensus estimate of EUR 316.0m. We also project loan loss provisions to shape at EUR 67.8m (+8% q-o-q, -5% y-o-y), assuming a CoR of 70bps for the quarter and lower than consensus estimate of EUR 73.0m. Finally, we expect the results to be burdened by an NPA (Non-Performing Assets) loss of EUR 70.0 from NPE securitization, slightly higher than consensus estimate of EUR 64.0m.
Table 1 | Quarterly Group P&L forecasts
|
(EUR m) |
Optima 2Q24e |
1Q24 |
QoQ |
2Q23 |
YoY |
|
Cons 2Q24e |
QoQ |
Optima vs Cons |
|
Net Interest Income |
399.3 |
420.2 |
-5% |
396.6 |
1% |
|
405.0 |
-4% |
-1.4% |
|
Fee income |
98.0 |
96.3 |
2% |
90.8 |
8% |
|
98.0 |
2% |
0.0% |
|
Core income |
497.3 |
516.5 |
-4% |
487.4 |
2% |
|
503.0 |
-3% |
-1.1% |
|
Non-core Revenues |
25.0 |
43.5 |
-43% |
36.6 |
-32% |
|
24.0 |
-45% |
4.2% |
|
Total revenues |
522.3 |
560.0 |
-7% |
524.0 |
0% |
|
526.0 |
-6% |
-0.7% |
|
Operating Expenses |
(208.6) |
(203.7) |
2% |
(215.9) |
-3% |
|
(210.0) |
3% |
-0.7% |
|
Pre-Provision Profit |
313.7 |
356.3 |
-12% |
308.1 |
2% |
|
316.0 |
-11% |
-0.7% |
|
Loan Impairments |
(67.8) |
(62.9) |
8% |
(71.6) |
-5% |
|
(73.0) |
16% |
-7.1% |
|
NPA loss |
(70.0) |
(6.6) |
957% |
5.2 |
– |
|
(64.0) |
866% |
9.4% |
|
Reported net profit |
132.6 |
211.1 |
-37% |
191.4 |
-31% |
|
142.0 |
-33% |
-6.6% |
source: Optima bank estimates, Company Median consensus estimate
Table 2 | Interim Group P&L forecasts
|
(EUR m) |
Optima 1H24e |
1H23 |
YoY |
Cons 1H24e |
Optima vs Cons |
|
Net Interest Income |
819.5 |
780.1 |
5% |
825.2 |
-0.7% |
|
Fee income |
194.3 |
172.4 |
13% |
194.3 |
0.0% |
|
Core income |
1,013.7 |
952.5 |
6% |
1,019.5 |
-0.6% |
|
Non-core Revenues |
68.5 |
53.5 |
28% |
67.5 |
1.5% |
|
Total revenues |
1,082.2 |
1,005.9 |
8% |
1,086.0 |
-0.3% |
|
Operating Expenses |
(412.3) |
(421.4) |
-2% |
(413.7) |
-0.3% |
|
Pre-Provision Profit |
670.0 |
584.6 |
15% |
672.3 |
-0.3% |
|
Loan Impairments |
(130.7) |
(145.4) |
-10% |
(135.9) |
-3.8% |
|
NPA loss |
(76.6) |
(18.2) |
320% |
(70.6) |
8.5% |
|
Reported net profit |
343.8 |
302.5 |
14% |
353.1 |
-2.7% |
source: Optima bank estimates, Company Median consensus estimate
Court of Audit gives the green light for the signing of the Attiki Odos concession
According to Powergame.gr, the Court of Audit approved yesterday the signing of the new concession of Attiki Odos between the HRADF and GEKTERNA. As a reminder, the HRADF had declared last September GEKTERNA as the preferred investor for the new concession period of ATIKI ODOS with an offer of EUR 3.27bn, followed by the Vinci-Mytilineos partnership with an offer of EUR 3.11bn.
Noval Property received a new LEED Gold environmental certification
The company received a new LEED Gold environmental certification for its new logistic centre in Mandra. The management highlighted that already 25% of Noval Property’s portfolio consists of LEED or BREEAM certified buildings.
Calendar of Events
Macros
01/08/24 | S&P Global Greece Manufacturing PMI JUL (08:00 UTC)
09/08/24 | CPI JUL & Industrial Production JUN
Market
12/08/24 | MSCI Quarterly Index Review announcement (Effective date: September 02, 2024)
2Q/1H24 Results Release
01/08/24 | Optima bank (Bef-mkt), National Bank of Greece (Bef-mkt)
02/08/24 | Alpha Services and Holdings (08:00)
06/08/24 | PPC (Aft-mkt)
07/08/24 | OTE (Bef-mkt), Coca-Cola HBC
08/08/24 | Petropoulos
09/08/24 | BriQ Properties, Intercontintal International
29/08/24 | HELLENiQ ENERGY (Aft-mkt), Austriacard Holdings
02/09/24 | Sarantis
03/09/24 | OPAP (Aft-mkt), Trade Estates (Aft-mkt)
04/09/24 | Ideal Holdings (Flash Note) (Bef-mkt), QUEST Holdings (Aft-mkt)
10/09/24 | Fourlis (Aft-mkt), Athens Airport (Aft-mkt)
11/09/24 | ElvalHalcor (Aft-mkt)
12/09/24 | Alpha Trust Andromeda
17/09/24 | Noval Property
18/09/24 | Cenergy Holdings
19/09/24 | Viohalco, Attica Bank, Alpha Real Estate, Lavipharm
20/09/24 | Premia Properties, Logismos
25/09/24 | ADMIE Holding (Bef-mkt), AS Company (Aft-mkt)
26/09/24 | EYDAP, INTERTECH
EGM / AGM
02/08/24 | Athens Medical Center (EGM)
05/08/24 | Mediterra (EGM)
12/08/24 | Ble Kedros (AGM)
20/08/24 | Thessaloniki Water & Sewage Co. (AGM)
04/09/24 | ELVE (AGM), Moda Bagno (AGM)
06/09/24 | Domiki Kritis (AGM)
10/09/24 | Epsilon Net (AGM)
Ex-Dividend
01/08/24 | Creta Plastics (EUR 0.5001157168)
05/08/24 | Alpha Real Estate (EUR 0.26)
19/08/24 | Ble Kedros
22/08/24 | KRI-KRI (EUR 0.35)
27/08/24 | Thessaloniki Water & Sewage Co.
29/08/24 | Real Consulting (EUR 0.04)
09/09/24 | ADMIE Holding (EUR 0.058)
12/09/24 | Evrofarma (EUR 0.05)
17/09/24 | Epsilon Net
Ex-Capital Return
26/08/24 | Biokarpet (EUR 0.02)
28/08/24 | GEK TERNA (EUR 0.25)
12/09/24 | Unibios (EUR 0.02)
|
Research Department Τ: 210 8173 383 F: 210 3279 287 E: [email protected] 32 Aigialeias & Paradissou str., 15125, Maroussi optimabank.gr |
|
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