Daily report 06-08-2015 by Manos Chatzidakis - Market Monitor - Market Comment - In the Spotlight + Results - Mikrometoxos.gr | Mikrometoxos.gr

Daily report 06-08-2015 by Manos Chatzidakis – Market Monitor – Market Comment – In the Spotlight + Results

06.08.2015 09:28
Daily report 06-08-2015

μανος χατζ.

Manos Chatzidakis <mchatzidakis@beta.gr> 6 Αυγούστου 2015 – 9:16 π.μ.
Προς: Manos Chatzidakis <mchatzidakis@beta.gr>
Thursday, August 06, 2015
 Market Monitor 
¢           Market Comment

Greek stocks continued to slide for a third session in a row on Wednesday, with banks suffering another dramatic day with losses of 27 percent for their sector index. Banks’ cumulative losses since the reopening of the local bourse on Monday reached 63.8 percent, diving to a new historic low of 238.40 points. General index closed at 643.22 points, shedding 2.53 percent from Tuesday’s 659.94 points. In total 39 stocks enjoyed growth, 56 suffered a decline and 16 remained unchanged.
Turnover amounted to 81 million euros, up from Tuesday’s 63.7 million. As the banking sector hasn’t stabilized yet despite exaggerated losses in the last three sessions we expect another volatile session. In today’s agenda HTO and Frigoglass will announce H1 results before the opening of the market while ASE volatility interrupters return to normal values.


¢           In the Spotlight


Greece:  The negotiations between Greece and its creditors are entering in the final turn, however there are many and major issues that remain open. The first critical issue remains the macro and fiscal scenario which will define the need of the additional measures as well as the worst case scenarios for the stress tests of the Greek banks ahead the recapitalization by the end of November. The Greek authorities are expected to agree on the principles for the new “super-privatization fund” with the institutions, while a new round of discussions on the non-performing loans is opening. Also, today, the negotiation teams will discuss on the embedding of all social benefits into a new “national guarantee income” which will be addressed to only limited beneficiaries. The latter is also a hot potato for the Greek Government.
According to press articles, the institutions are rejecting the Greek proposal for establishment of a “bad bank” or other “interim” management organization for the non-performing loans. The key points of the troika’s proposal are as follows:


¡  Permanent “social safety net” for the protection of the really sensitive groups. This permanent mechanism will also protect the “sensitive groups” from the foreclosures.

¡  In the meantime, the protection from foreclosures should regard only the borrowers that cannot pay their loans. This means that the criteria for the total wealth, the annual income, etc., which were included in the previous legislation for the settlement of the bad loans will radically reduce.

¡  The main criteria for the protection from foreclosures will be the “repayment ability” and not the declared income or the value of the properties of a household.

¡  Banks should create reliable systems for the measuring and the evaluation of the credit rating of their clients.

¡  Banks should create efficient mechanism for the management of the arrears.

¡  Banks should provide solutions to the borrowers for the repayment of their loans as well as reliable information.

¡  The banks can cooperate with other independent organizations or specialists from the private sector to create and enhance their systems.

¡  Enhance of the juridical procedures on the foreclosures and the settlement of the loans.

Bank of Greece and ECB’s SSM in cooperation with the firm Oliver Wyman are starting the Asset Quality Review (AQR) ahead of the stress tests and the recapitalization of the Greek banks by the end of November. According to the plan:


¡  By 15th of August, the Executive Committee of the authorities and the Project Manager Oliver Wyman should define the methodology for the AQRs.

¡  By mid-October, the AQR should have been concluded.

¡  From mid-October to mid-November at the latest, the stress tests should have been completed. The execution of the stress test will be conducted by KPMG, Deloitte, EY and Grant Thornton. The final review of the stress test results will be finalized by the CPMO (Central Project Management Office) which includes staff from SSM and Bank of Greece.

¡  By the end of November, the recapitalization should have been completed.

¡  The criteria and the methodology are not yet defined, thus there is no reliable estimation regarding the capital needs of the Greek banks. However, given the fact that the non-performing loans and the potentially bad loans have reached 100 billion Euros, in conjunction that 55% of them are fully covered by the banks provisions, banking sources estimate that at first state the Greek banks may need 10-15 billion Euros.

¡  Eurozone sources say that ESM is not willing to grant in advance the required amount for the recapitalization of the banks at this time, as Greek side suggested. This means that we will see the discussions later.


The Greek Government is considered that it will agree today on the troika’s proposal on the new privatization fund. This will be based on the current organization that will be enhanced. The new super-fund will:

¡  be fully (politically) independent.

¡  receive all the privatization projects.

¡  The stakes of the Hellenic Financial Stability Fund (HFSF) in the Greek banks

¡  Other rights, warrants and assets for development or sell-off.

¡  Implementation of the privatization program as it has been agreed on from the first MoU and onwards.


ASE: Athens Exchange after the first three days of its reopening adjusted the parameters of the Volatility Interrupters of its Main Cash Market to its normal values, as follows:


Parameter Current Value New Adjusted Value
Static range 7% 10%
Dynamic range 1.5% 3%
Pre-call Phase (collection of orders phase) duration (Method 2) ten minutes five minutes
Pre-call Phase Extension duration (Method 2) 

The duration of the Pre-call phase can be extended when the projected Auction Price significantly deviates from the auction’s reference price.


This significant deviation is defined as a percentage of the static range and is called Price Tolerance Rule

20%(that corresponds to a deviation from the reference price by 1.4%) 30%(that corresponds to a deviation from the reference price by 3%)
The duration of the Pre-call Phase Extension five minutes three minutes


Greece/PDMA: Greece on Wednesday successfully auctioned a six-month Treasury bill issues raising 813 million euros from the market. The interest rate of the issue was set at 2.97 pct, unchanged from the previous auction last month. Bids submitted totaled 813 million euros, 1.30 times more than the asked sum of 625 million euros. The auction was made with the market’s primary dealers while settlement date was set for Friday, 7 August. The Public Debt Management Organization will also accept non-competitive bids up to 30 pct of the asked sum by Thursday, 6 August.


Bank of Piraeus: Kuwait’s Al Ahli Bank received approval from the Egyptian central bank to buy Piraeus Bank’s unit in the North African country, it said on Wednesday. Al Ahli Bank, which won approval from the Kuwaiti central bank last month, still needs the Egyptian Financial Supervisory Authority to approve the deal, it said in a bourse filing. It will pay $150 million cash for a 98.5 percent stake in the business, helping Kuwait’s seventh-largest bank by assets expand and giving Greece’s Piraeus a much-needed liquidity boost.


Aegean Airlines: According to press reports Aegean airline carried 19 percent more travelers in July than a year earlier, adding 240,000 passengers to reach 1.473 million. International flights again provided the greatest lift for the company, posting an increase of 28 percent in traffic from the carrier’s nine hubs around the country. Athens recorded the highest annual growth, amounting to 37 percent, as it received 808,450 more passengers last month than in July 2014. Traffic to Iraklio, Crete, grew 30 percent and to Rhodes 15 percent. The airline views these two increases as particularly positive, as the overall market recorded a decline in arrivals to the two destinations, mainly due to the drop in tourism from Russia.


HTO (Q2/H1 Results preview): HTO will announce its H1 results today before the opening of the market and host a conference call after market hours. We expect a resilient performance in domestic business in fixed telephony and OTEtv (Sales +0.4%, EBITDA +0.4) while pressure is expected to Romanian subsidiary on strong competition and unfavourable one off comps. In Q2 the Group accounted 85m expense on new VRS costs (€30m net savings per annum) which will affect reported EBITDA. All in all we expect reported net earnings to land at 33m (-74%) Other issues to discuss in H1 conference call: Development of arrears in Q3, OTEtv new additions and competition in domestic fixed line market.


TURNOVER (m euro) 2014 H1 2015 H1 E y-o-y
OTE 743 746 0,4%
COSMOTE 859 835 -2,8%
ROMTELECOM 306 300 -2,0%
OTHER 204 212 3,9%
ELIMΙNATIONS -198 -210 6,1%
GROUP            1.914              1.883   -1,62%
EBITDA (m euro) 2014 H1 2015 H1 E y-o-y
OTE 282 283 0,4%
COSMOTE 288 260 -9,7%
ROMTELECOM 83 60 -27,7%
OTHER 26 30 15,4%
GROUP               679                 633   -6,77%
EBITDA Mrg 2014 H1 2015 H1 E y-o-y
OTE 38,0%  37,9%  -2 bps 
COSMOTE 33,5%  31,1%  -239 bps 
ROMTELECOM 27,1%  20,0%  -712 bps 
OTHER 12,7%  14,2%  +141 bps 
GROUP 35,5%  33,6%  -186 bps 
Group Net Income 128,1 33,2 -74,1% 
Net Mrg 6,69% 1,76% -493 bps 


Conference call details (Thu. 6/8/2015 – 17:00 GR time):


¡  Greece Free Call Dial In         00800 4413 1378

¡  UK Free Call Dial In                               0800 953 0329

¡  US callers dial in                    1 866 819 7111

¡  International Dial In                              +44 (0) 1452 542 301


Mytilineos/METKA (Q2/H1 Results): The Group announced a satisfactory set of H1 results broadly in line with our and consensus estimates. In σpecifics:


¡  On Group level Q2 revenues came at €317.66mn (+2%) with EBIT 20% lower at €31.1mn. Net profit for the quarter stood at €10mn vs €8.2mn last year. On a 1H basis, the group reported revenues of €639.64mn (-2.6%), EBITDA of €118.7mn (-1.3%) and net profit of €32.8mn vs €23.4mn last year.

¡  Metallurgy & Mining Sector stood at € 297.7mn (+45%) with EBITDA at € 65.4 million vs € 23.7 million for the same period in 2014, posting an increase of 176%. Aluminium of Greece was the star performer of the Group continuing for 4rth consecutive quarter a strong Top and Bottom line

¡  METKA revenues stood at € 257.6 million vs € 361.9 million last year due to the slowdown in Syria. EBITDA stood at € 46.2 million, down 19.8% YoY while Net profit stood at € 29.2 million, against € 54.5mn last year.

¡  The Energy Sector, reported 1revenues of € 86.0 million -4.4% YoY with the EBITDA at € 6.6mn vs € 42.4mn last year. The plunge in EBITDA is associated to the prolonged delay in the finalization of the framework for the energy market’s operation by the competent bodies, including the capacity availability mechanism or the new flexibility remuneration mechanism. Production was up by 5.9% in 1H.

¡  H1 Results do not account for an income of €22.3 million corresponding to the value of the Capacity Availability Certificates despite the final proposal issued by RAE due to delays by the relevant Ministry. Including this item, the Group’s Η1 net profit would have been higher by €18.0m to €50.8m.


Overall results are in line with year guidance of €90m (including capacity payments), supported by strong extrovert activity and AoG sales momentum.  Management refrained from commenting on macro situation in Greece yet stressed that all actions to preserve shareholders interests are taken.



Mytilineos Group 2014 2015 Y-o-Y 2014 2015 Y-o-Y
EUR thous. H1 H1 (%) 2Q 2Q (%)
Sales 656.405 639.644 -2,6% 311.825 317.664 1,9%
EBITDA 120.579 118.268 -1,9% 53.328 44.135 -17,2%
EBITDA Mrg 18,4%  18,5%  +12 bps  17,1%  13,9%  -321 bps 
Net Income 23.366 32.826 40,5% 8.156 10.063 23,4%
Net Mrg 3,6%  5,1%  +157 bps  2,6%  3,2%  +55 bps 
ΜΕΤΚΑ 2014 2015 Y-o-Y 2014 2015 Y-o-Y
EUR thous. H1 H1 (%) 2Q 2Q (%)
Sales 361.867 257.560 -28,8% 172.807 131.831 -23,7%
EBITDA 57.645 46.275 -19,7% 24.925 13.388 -46,3%
EBITDA Mrg 15,9%  18,0%  +204 bps  14,4%  10,2%  -427 bps 
Net Income 54.496 29.239 -46,3% 29.056 6.210 -78,6%
Net Mrg 15,1%  11,4%  -371 bps  16,8%  4,7%  -1.210 bps 


Frigoglass (Q2/H1 Results): Frigoglass announced its H1 results which exclude discontinued Glass Operations as the segment is sold to GZI Mauritius for €200m consideration. In specifics:

¡  Second-quarter sales in Cool Operations were marginally higher year-on-year at €111.2 million, despite ongoing macro uncertainty in some of our markets. Our business in Africa significantly improved in the quarter, mainly driven by higher year-on-year sales to Coca-Cola bottlers in South Africa and Nigeria. In Asia, sales grew by c.9% on easy comparables in India and market share gains within the Coca-Cola system in China. While sales to Coca-Cola bottlers were up in double digits in East Europe, overall sales in the region declined in high single digits. Our business in West Europe was impacted by the ongoing ramp-up phase of our new ICOOL range. The recent transformation of our business model in the US continued to deliver profitable sales growth in the quarter.

¡  Gross profit (excluding depreciation) decreased by c.1% to €23.7 million in the quarter, resulting in a gross profit margin reduction of 40 basis points year-on-year to 21.3%. This margin deterioration largely reflects increased production costs caused by the ramp-up of the new ICOOL/ILOOK product platform. Gross margin reduction in the quarter also reflects a less favorable geographic sales mix. Operating expenses (excluding depreciation) increased by c.2% to €11.6 million, implying a broadly unchanged year-on-year operating expenses over sales margin at 10.4%.

¡  EBITDA in the quarter was €12.0 million, down c.9% year-on-year, with EBITDA margin declining by 120 basis points to 10.8%. Depreciation was €4.0 million, down c.13% year-on-year, mainly reflecting the restructuring related benefits from the Turkish manufacturing volume integration into Romania. Operating Profit (EBIT) declined by c.7% to €8.0 million. Net finance costs increased by c.12% to €8.1 million following higher foreign exchange losses compared to the prior-year quarter. Frigoglass reported a marginal net loss from continuing operations of €0.1 million, compared to an adjusted for restructuring charges break-even result in 2Q14.

¡  The discontinued Glass Operations had a solid performance in the quarter. EBITDA increased by c.3% to €7.6 million and EBITDA margin improved by 200 basis points to 22.3%, primarily reflecting the improved year-on-year operating performance of Jebel Ali. Net profit from discontinued Glass Operations was €1.1 million, compared to a net profit of €0.4 million last year.

¡  In the second quarter, capital expenditure from continuing operations amounted to €2.1 million, compared to €2.6 million last year. This capex level includes committed spending towards quality improvements and projects targeting operational efficiencies across our business.

¡  Net trade working capital from continuing operations increased by c.4% year-on-year to €127.4 million, mainly reflecting a c.11% increase of inventory levels. The increase in inventory reflects a low base last year, impacted by a write-off related to the fire incident in India. On a like-for-like basis, inventories would have been marginally higher than last year, reflecting stock build-up due to increased demand in Q3. Net working capital was also impacted by the higher level of receivables, reflecting an unfavorable geographic mix following increased sales in Africa and Asia. Free cash flow from continuing operations deteriorated by about €31 million to an outflow of €28 million at the end of June 2015, primarily reflecting increased working capital levels. Net debt from continuing operations at quarter-end reached €305.3 million, compared to €263.7 at the same period last year.


FRIGOGLASS 2014 2015 Y-o-Y 2014 2015 Y-o-Y
EUR thous. H1 H1 (%) 2Q 2Q (%)
Sales 197.672 201.059 1,7% 109.937 111.212 1,2%
EBITDA 22.337 20.052 -10,2% 13.153 11.992 -8,8%
EBITDA Mrg 11,3%  10,0%  -133 bps  12,0%  10,8%  -118 bps 
Net Income -3.381 -3.962 -17,2% 22 -94 -527,3%
Net Mrg -1,7%  -2,0%  -26 bps  0,0%  -0,1%  -10 bps 


Autohellas (Q2/H1 Results): Group turnover for the first half of 2015 reached €76,2m from €67.1m in last year’s respective period reporting an increase of 13.6%. Earnings after tax settled at €7.6m from profits €2.3m in the first half of 2014. The positive trend in tourist arrivals during the first 6 months of 2015 and the increased Autohellas’s market share led in an increase of short term rentals (rent a car) of 12.3%, while long term rentals (Fleet management) in Greek corporate customers had an increase of 4.2%. H1 2015 results also include the earnings from share dividend from Aegean Airlines of €5.8m. Hence, operational earnings after tax, excluding dividends, reached €3.3m, an increase of 46.9% in comparison to last year’s relative period. During the first half of 2015, total turnover of the company’s subsidiaries in countries outside Greece was reported at €17.4m versus €15.2m in the first six months of 2014, an increase of 14.5%, representing 22.8% of total group’s turnover.


AUTOHELLAS 2014 2015 Y-o-Y 2014 2015 Y-o-Y
EUR thous. H1 H1 (%) 2Q 2Q (%)
Sales 67.129 76.239 13,6% 39.014 44.779 14,8%
EBITDA 31.173 35.430 13,7% 19.257 21.725 12,8%
EBITDA Mrg 46,4%  46,5%  +3 bps  49,4%  48,5%  -84 bps 
Net Income 2.270 7.617 235,6% 3.349 8.808 163,0%
Net Mrg 3,4%  10,0%  +661 bps  8,6%  19,7%  +1.109 bps 


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