Greek Market Watch: Passenger traffic, OPAP, Titan Cement, Aegean Airlines, OTE, Entersoft

Market Comment

ATHEX headed north yesterday for a second session in a row, outperforming the European stock markets. In more detail, the General Index rose by 0.29% at 1,399.87 units, (FTSE Large Cap: +0.21%, FTSE Mid Cap: +0.74%, Banks Index: +0.34%) and the traded value was shaped at EUR 175.6m, down from Tuesday’s EUR 200.8m. We expect the positive momentum to continue today. 

Today’s Headlines

·        Total and international passenger traffic up in February (Fraport Greece)

·        OPAP 4Q23 results: High record 4^th quarter, slightly above our EBITDA call, driven by both channels; additional shareholders remuneration of EUR 0.85/share on top of EUR 1.00/share distributed in Nov23.

·        OPAP Financial Calendar 2024 update

·        Titan Cement 4Q/FY23 results – Record performance in terms of EBITDA driven by higher volumes and strong pricing as well as better energy cost performance. Declared 42% higher y-o-y dividend at EUR 0.85/share. Positive outlook for 2024.

·        Aegean Airlines 2023 conference call highlights

·        OTE to reduce wholesale prices in FTTH-Press

·        Verdalite Limited controls 87.31% of Entersoft, to submit mandatory tender offer

 Sector Headlines 

Total and international passenger traffic up in February (Fraport Greece)

According to Fraport Greece (operator of the 14 regional Greek airports) total passenger traffic in Greek airports in February 2024 rose by 13.4% y-o-y, with international passenger traffic standing also 9.5% higher. 

Company Headlines 

OPAP || BUY | CP: EUR 16.80 | TP: EUR 19.30

4Q23 results: High record 4^th quarter, slightly above our EBITDA call, driven by both channels; additional shareholders remuneration of EUR 0.85/share on top of EUR 1.00/share distributed in Nov23.

Facts:  OPAP released solid 4Q23 results, slightly above our EBITDA estimates. In particular, revenues came in at EUR 581.2m (slightly above Optima, +7.5% YoY), EBITDA reached EUR 210.2m (10.6% above our call, +3.7% YoY), recurring net profits of EUR 109.7m vs. 127.6m last year or down by 14% and net profits of EUR 100.6m down by 67.2%, vs. EUR 306.5m in 4Q22 with the extra profits from the BETANO sale last year. Supported by another strong year’s performance, OPAP declared total final distributions at EUR 0.85/share (of which EUR 0.60 DPS and 0.25 capital return), below our call for an extra amount of EUR 1.00 per share. Note that total distributions for FY23 amount to EUR 1.85/share (DY: 11%) The company will hold a conference call today at 16:00 Athens time (14:00 UK time).

4Q/FY22 Group Key P&L Figures

EUR m	4Q22	4Q23a	y-o-y	FY22	FY23a	y-o-y	Optima	Actual vs. Optima
Betting(Retail+Stoiximan+Online OPAP)	161,0	180,9	12,4%	603,8	645,5	6,9%	640,4	0,8%
Lottery (Retail + Online Tzoker)	193,9	197,6	1,9%	709,5	730,0	2,9%	730,3	0,0%
Instant & Passives	31,9	30,2	-5,2%	107,9	115,9	7,4%	117,1	-1,0%
VLTs	93,4	96,2	3,0%	318,4	344,5	8,2%	345,5	-0,3%
Online casino (Online OPAP + Stoiximan)	60,7	76,3	25,7%	199,5	251,8	26,2%	244,3	3,1%
Group GGR	540,9	581,2	7,5%	1939,0	2087,7	7,7%	2077,6	0,5%
Recuring EBITDA	204,0	197,6	-3,1%	744,9	746,2	0,2%
EBITDA	202,7	210,2	3,7%	736,0	730,0	-0,8%	709,3	2,9%
Recuring net profit	127,5	109,7	-14,0%	439,3	436,0	-0,8%
EAT ex-minorities	306,5	100,6	-67,2%	592,3	408,3	-31,1%	420,1	-2,8%

Source: Optima bank, the Company

Analysis: Turning to segmental performance, the strong results were driven by growth in all revenue categories except Instant & Passives, which showed a general weakness in the 2^nd half of the year.

Betting and Online Casino were the main drivers of the 4Q23 performance with 12.4% and 25.7% growth accordingly, while VLTs also expanded its revenues by 7% y-o-y.

Additionally, both sales channels increased their GGR contribution, with the digital channel accounting for c.27% of total GGR in 4Q23 (from 22.9% in 4Q22). OPAP generated free cash flows of EUR 106.4m in 4Q23 compared to FCF of EUR 259.5m in 4Q22 while net debt remained at very low levels with net/debt to EBITDA at 0.23x

Comment: Overall, OPAP delivered another strong set of 4Q23 and FY23 results, leveraging on both channels (land-based and online), aided by solid online gaming performance and retail growth.

Consequently, the company managed to exceed the latest management’s EBITDA guidance on the recurring basis of EUR 720-740m, aided by the one-off de recognition of the Markopoulos Park lease liability of EUR 13.4m in 4Q23, which allowed the management to declare a hefty final distribution to the shareholders of EUR 0.85/share.

Also, management posted a quick FY24 outlook with GGR up by 5% y-o-y to EUR 2.150-2.200m and EBITDA up by 5.5% y-o-y to EUR 750-770m. We remain positive on the stock, and we keep our buying rating. 

OPAP Financial Calendar 2024 update

The company announced that the stock will trade ex-dividend (EUR 0.60/share) on 29 April and ex-capital return (EUR 0.25/share) on 25 June. 

Titan Cement || BUY | CP EUR 25.45 | TP EUR 33.90

4Q/FY23 results – Record performance in terms of EBITDA driven by higher volumes and strong pricing as well as better energy cost performance. Declared 42% higher y-o-y dividend at EUR 0.85/share. Positive outlook for 2024.

Facts: Titan Cement International (TCI) reported that 4Q23 turnover rose by 5.5% YoY to EUR 654.8m, while EBITDA advanced by 44% YoY to EUR 143.6m (recall that the company has already released in February preliminary, unaudited Group revenues and EBITDA at > EUR 2.54bm and EUR >535m). Consequently, reported net income more than doubled YoY to EUR 71m (vs. EUR 20.6m in 4Q22 and our EUR 37.4m estimate).

4Q/FY22 Group Key P&L Figures

EUR m	4Q22	4Q23	Y-o-Y change	FY22	FY23	Y-o-Y change
Turnover	620.4	654.8	5.5%	2282.2	2547.0	11.6%
Greece	91.3	108.8	19.2%	334.4	407.8	21.9%
USA	351.0	372.2	6.0%	1,306.3	1,476.9	13.1%
SEE	107.5	107.9	0.4%	385.9	422.4	9.5%
E.MED	70.6	65.9	-6.7%	255.6	239.9	-6.1%
EBITDA	96.7	143.6	48.5%	331.2	540.3	63.1%
EBITDA margin	15.59%	21.93%	634	14.51%	21.21%	670
Greece	4.9	12.7	159.2%	31.8	64.7	103.5%
USA	57.8	76.9	33.0%	184.8	295.9	60.1%
SEE	29.4	39.0	32.7%	95.0	146.6	54.3%
E.MED	4.6	15.1	228.3%	19.6	33.2	69.4%
Net income (adj.)	20.6	71.1	245.1%	109.7	268.7	144.9%

Source: Optima bank, The Company

Greece: Greece closed the year with sales advancing in double-digits up both for the year and the last quarter thanks to higher global prices in seaborne traded cement across all export markets from Greek plants and reduced CO2 emissions. Consequently, 4Q23 turnover rose by 19.2% YoY to 108.8m, resulting in EBITDA of EUR 12.7m from EUR 4.9m in 4Q22. 

US: The US market delivered a year of robust growth in 2023 as well as in 4Q23, and also with improved profitability, aided by increased public spending and price increases across most of Titan America’s main products. In this context, US sales and EBITDA advanced by 6.0% and 33.0% YoY to EUR 372m and EUR 76.9m respectively.

SE Europe: The year marked a historic high in terms of sales volume across all markets and reached the 10m tones mark, aided by infrastructure programs with the backing of European funding, driving turnover up by 0.4% YoY to EUR 107.9m in 4Q22, while the easing on the cost front from the energy prices, drove segmental EBITDA expansion by 32.7% YoY to EUR 39.0m. 

EMED: Egypt and Turkey encountered challenging policy decisions as the energy crisis -stemming from the war in Ukraine and the recent turmoil in the Middle East exacerbated macroeconomic imbalances.

The situation further deteriorated by a spike in external borrowing costs and the depreciation of local currencies against the dollar.

In Turkey, the real estate sector is booming as a safe haven against inflation and large investment projects have been fuelled by the reconstruction process following the earthquake in February 2023.

Thanks to robust demand, prices increased which offsetting the elevated production costs and the direct effect of higher inflation, turnover recorded a small decrease by 6.7% YoY to EUR 65.9m, while EBITDA jumped to EUR 15.1m compared to EUR 4.6m in 4Q22.

Operational figures: In FY23 the group (including Brazil) sold cement equal to 17.5m tons, up 2%, ready mix of 5.9m m3, up 5%, and aggregates of 19.9m tons, up 4%.

Dividend front: The BoD proposed increased by 42% dividend distribution, at EUR 0.85/share. 

Aegean Airlines 2023 conference call highlights

Management described 2023 as an excellent year in terms of growth, profitability, network expansion,   repayment of loans, cash flow generation and the purchase of warrants from the Greek state. The key highlights for the year ahead are:

a) the  company’s training centre is  already accepting third parties for training while the new MRO will be commercially operational in the next couple of months,

b) the target of the airline is to keep a sustainable manner of revenues increase and the good cost control with a balance in RASK and CASK as achieved in FY23,

c) management’s intentions is to distribute at least 40% of net profits as a dividend in the years to come,

d) management has provided updated guidance for 7% ASK growth in 2024 from the two main bases of Athens and Thessaloniki, adding +1.1m available seat from last year (note that 18.5m seats offered in FY23),

e) Aegean Airlines and Pratt & Whitney reached an agreement for a compensation that will cover a substantial cost of the damage  the airline will face (including  increased fuel burn, increase leasing costs and the maintenance costs of the excess fleet).

f) Management will cover Neos maintenance by returning 2 aircrafts from Anima Wing’s disposal and by reduction the charter activity to increase core business activity of schedule activities, while management estimate that the Neo problem will be completely resolved in the summer of 2026. 

OTE to reduce wholesale prices in FTTH-Press

Reportedly, (Bloomberg), OTE submitted a proposal for approval to the National Telecommunications & Posts Commission to increase the penetration of FTTH to the households by providing mutual discounts that could reach up to 28% between providers at wholesale prices, with connection volume commitments. 

Verdalite Limited controls 87.31% of Entersoft, to submit mandatory tender offer

Entersoft announced that Verdalite Limited, which is controlled by Olympia Group and Rucio Investment S.à.r.l (50/50) has increased its stake to 33.58% and now holds 87.31% in the company and according to the law, it will submit a mandatory tender offer for the remaining of the shares (12.69%). 

Calendar of Events

Macros

14/03/24 | Import Price Index in Industry JAN

15/03/24 | Moody’s – Greek sovereign credit review

20/03/24 | Turnover Index in Industry JAN

22/03/24 | Current Account Balance JAN

FY23 Results

20/03/24 | Motodynamics, Alpha Trust Andromeda

21/03/24 | Austriacard Holdings, Epsilon Net (Bef-mkt)

27/03/24 | Hellenic Exchanges

28/03/24 | Trastor REIC

29/03/24 | Piraeus Port Authority

03/04/24 | QUEST Holdings (Aft-mkt)

09/04/24 | PPC (Aft-mkt)

12/04/24 | Sunrise Mezz PLC, Phoenix Vega Mezz PLC

17/04/24 | Lamda Development

25/04/24 | EYDAP

30/04/24 | Biokarpet

EGM / AGM

27/03/24 | Mytilineos (EGM)

10/04/24 | Petropoulos (AGM)

18/04/24 | Autohellas (AGM)

23/04/24 | Sarantis (AGM)

25/04/24 | OPAP (AGM)

30/04/24 | Aegean Airlines (AGM)

Ex-Dividend

19/03/24 | Jumbo (extraordinary cash distribution EUR 0.60/share)

15/04/24 | Petropoulos

29/04/24 | OPAP

20/05/24 | Aegean Airlines

Ex-Capital Return

26/03/24 | Alpha Real Estate Services (EUR 2.20) 

Research Department Equity Research  Τ: 210 8173 383 F: 210 3279 287 E: [email protected] 32 Aigialeias & Paradissou str., 15125, Maroussi optimabank.gr