ATHEX headed south yesterday, after six consecutive sessions with gains, in line with the European stock markets. In more detail, the General Index dropped by 0.47% at 1,397.14 units, (FTSE Large Cap: -0.77%, FTSE Mid Cap: +0.39%, Banks Index: -1.61%) and the traded value was shaped at EUR 232.0m, up from Tuesday’s EUR 177.9m. We expect ATHEX to try to move higher today, eyeing the international markets.
EC accuses PPC over predatory pricing in the Greek wholesale electricity market; we don’t expect any immediate and major negative impact
The EU released yesterday its preliminary view that PPC has breached EU antitrust rules by selling electricity in the Greek wholesale market below cost, thereby excluding its main rivals. The EC accuses PPC that during 2013-19 it abused its dominant position on the Greek wholesale electricity market by supplying the electricity generated by its thermal plants (i.e., lignite and gas) at prices below their variable costs. If the EC concludes, that there is sufficient evidence of an infringement, it can impose a fine of up to 10% of a company’s annual worldwide turnover. It is noted however that this preliminary view does not prejudge the outcome of an investigation. In response to EC’s accusation PPC notes that the said period was before the company’s transformation into a modern and sustainable energy company.
Exercise on potential Impact on PPC | Based on the table below, past experience suggests that IF and entity (and only then): a) there is 5% chance that the max amount fine is 10% of revenues, and b) there is 64% chance that fine is <1% of revenues. That said, and based on our projected Group Turnover for 2024-26e of c.EUR 10bn, and IF any fine will imposed on PPC, there is 64% chance that this would be less than EUR 100m, or <EUR 0.26/share. It is noted that this procedure will most likely take time, at least 2-3 years according to similar cases.
Comment | We consider today’s sharp drop in PPC; share price (-4%) as excessive, a) considering that the said investigation refers to the past, with no impact on the company’s business model and investment programme, and b) taking into account that this investigations is ongoing over the past seven years, with no final conclusions expected in the short term and c) most likely, even if EC imposes a fine on the Company, the negative impact will most likely be minor. That said, and also taking into account that PPC appears deeply undervalued in 2024-25e EV/EBITDA (trades at a c29-39% discount), we reiterate our BUY recommendation on the stock, with a TP at EUR 17.40 (45% upside).
Piraeus targets net credit expansion growth of 5%-6% over 2024-2026-Press
Press reports indicate that Piraeus will announce on 14 February that it targets net credit expansion to grow by 5.0% to 6.0% per annum over 2024e-2026e, in line with our estimates and the NPE ratio to drop to 3.5% vs. 5.5% in 9M2023. Piraeus is our top pick in the sector with TP of EUR 5.00/share, implying 32% upside potential.
Alpha Services and Holdings Stock Options Rights
Alpha Services and Holdings announced that 1,142,026 Stock Options Rights were exercised (0.049% of the share capital), with a nominal value of Euro 0.29 per share and amounted to EUR 336,003.62. Following the above share capital increase through payment in cash, the share capital of the Company amounts to EUR 682,323,512.13, divided into 2,352,839,697 common, registered shares with voting rights and a nominal value of EUR 0.29 each. We reiterate our Buy rating on the stock and TP of EUR 2.10/share, implying 22% upside potential.
Jumbo sales up by 4% y-o-y; Guides for sales growth of 8-10% in 2024e (positive)
Jumbo released yesterday January sales up by 4% y-o-y on tough comparables, guiding for FY24e sales growth of 8-10% (in line with our 2024e sales estimate of EUR 1.18bn). In particular, Greece sales were up by +3%, Cyprus was flattish y-o-y, while Romanian and Bulgarian exhibited strong growth of 10% and 8% respectively. Additionally, Jumbo during yesterday’s EGM approved the distribution of an extraordinary DPS of EUR 0.6 (2.3% DY, ex-date 19 March, Payment on 26 March). During yesterday’s EGM, the management reportedly (Capital.gr) stated that the Company has temporarily suspended the supply from cargo ships from the East, as the freight costs have tripled, so as to keep prices for its consumers at low levels. Additionally, the management said that the company will distribute 30% of net earnings (that is c. EUR 0.72/share on our expected 2024e net profits of EUR 311m, below our EUR 1.72/share dividend estimate).
Coca Cola HBC appointed new CFO
The company announced that Mr. Anastasis Stamoulis will replace Mr. Ben Almanzar as the new Group Chief Financial Officer with effect from 1 May 2024. Mr. Stamoulis has a proven track record and broad experience gained from 16 years with Coca-Cola HBC where through his development journey he held several senior financial positions, including as CFO in several of the Company’s operations, as Group Financial Controller, Group Financial Operations and as Head of Strategic Finance and FP&A. Recall that the company is scheduled to announce FY2023 results on Wednesday 14 February at 09:00 Athens/ 07:00 GMT Time and management will host a conference call on the same day at 11:00 Athens/09:00 GMT Time.
Athens dropped 47bps yesterday on well above average EUR 232m turnover driven by the first day of trading of the Athens International Airport (EUR 90m turnover with the shares closing at +11.7%). From the non-banks, the focus yesterday was PPC, ending the day at -3.8%, recovering from the lows of -7.6%. The banking sector was in a correction mode yesterday, closing at -1.6%. Stellar performance for Sarantis, up 5.6%.
MACRO – CORPORATE NEWS
The deficit in the trade balance for the 12M period to Dec 2023 reached EUR 31bn, a drop of 20% yoy. The trade deficit excluding oil products recorded a decline of 5% yoy in 2023.
PUBLIC POWER CORPORATION <PPC GA>
The EU Commission published yesterday a statement of objections to PPC over predatory pricing in the Greek wholesale electricity market, breaching EU antitrust rules by selling electricity in the Greek wholesale market below cost, thereby excluding its main rivals. The Commission has expressed preliminary concerns that, ‘’between 2013 and 2019, PPC abused its dominant position on the Greek wholesale electricity market by supplying the electricity generated by its thermal plants (i.e., lignite and gas) at prices below their variable costs (meaning those costs that increase with the volume of electricity generated by PPC). According to the published statement, the suspected effects of this alleged conduct on the Greek wholesale market for electricity were that independent power providers were marginalized and investment into more environmentally friendly energy sources was deterred. This could have prevented the independent power providers from expanding at the retail level, thwarting the efforts towards retail market liberalisation that was formally completed in July 2013. Therefore, PPC’s conduct may have led to higher prices for Greek consumers, as well as higher emission levels of local pollution.’’ According to the statement, if the Commission concludes, after the parties have exercised their rights of defence, that there is sufficient evidence of an infringement, it can adopt a decision prohibiting the conduct and imposing a fine of up to 10% of a company’s annual worldwide turnover.
PPC, has officially acknowledged EU Commission’s statement of objection. The case commenced with the Commission’s inspection at PPC’s premises in February 2017, and proceedings were formally opened in March 2021 and PPC has cooperated with the Commission throughout the entire case. In its statement, PPC advocates that the case concerns a period before the redesign of the Greek electricity market in line with the EU Target Model but most importantly, well ahead of the company’s transformation into a modern and sustainable energy company. PPC emphasized that the statement of objections is only a part of the investigation and does not prejudge its outcome.
Following yesterday’s drop we believe the market has already digested the news and we expect investors to focus on the fundamentals of PPC, as this is a one-off event. Statistical probability on past cases from EU Commission demonstrate a single digit probability on the potential application of 10% fine, if of course the final ruling is in favour of EU Commission allegations.
JUMBO <BELA GA>
FYI, Jumbo announced sales guidance of 8-10% yoy for 2024, with a corresponding increase in profitability. On 2024 network rollout, Jumbo targets to open 3 more hyper-stores in Romania and 1 in Cyprus. In January 2024, sales increased +4% yoy, cycling a very strong month in 2023, according to the company’s statement. More specifically, Greece stood 3% higher yoy, Cyprus flat, Bulgaria +85 yoy and Romania +10% yoy (including also e-store).
ATHENS INTERNATIONAL AIRPORT <AIA GA>
FTSE will include AIA in the FTSE All-World Index, FTSE MPF All-World Index, FTSE Global Large Cap Index, FTSE Emerging Index, effective February 14.
Market Comment // The benchmark index erased initial gains of +0.28% to finish -0.47% lower on Wednesday (1,397 points) as momentum was dampened by EC remarks on potential breaches of antitrust rules by PPC. Trade activity jumped to €229m (vs. the 100-day moving average of €116m) buoyed by the AIA listing, with the latter accounting for c39% of traded value while popping 11.7% at its trading debut. Other gainers were Sarantis (+5.6%), Motor Oil (+3.5%) and Terna Energy (+2.5%), while Dimand, Jumbo, Autohellas and ADMIE Holdings also finished >1% higher. On the other hand PPC (-3.8%) and Elvalhalcor (-3.5%) underperformed among laggards, followed by Alpha Bank, Viohalco, NBG, Piraeus Bank, Mytilineos, Cenergy, Eurobank and Thrace Plastics (on >1% losses). EU futures point to a mixed opening today, with AIA trading likely to lead to further recalibrations of domestic investors’ portfolios.
FTSE and AIA // According to an official announcement, AIA will be added to the FTSE All-World Index effective from Wednesday 14th February, with an investability weighting of 15.6%. The stock will also be added in the FTSE Global Large Cap Index, the FTSE Emerging Index and the FTSE MPF All-World Index.
ASE and AIA // Following its listing yesterday, AIA will join the Athens General Index as of Monday 12th February (changes post the market close on 9th Feb) with a capping factor of 1 and investability weigh of 19%.
PPC // The European Commission has identified a potential violation of EU antitrust regulations by PPC, spanning from 2013 to 2019. PPC is being scrutinized for purportedly misusing its dominant stance in the Greek electricity market by selling electricity at prices below cost. In response, PPC released a public statement affirming its collaboration with the Commission while emphasizing that the investigation’s result remains open and is not predetermined.
Jumbo // Shareholders approved yesterday the distribution of a €0.60 special dividend (ex-div 19th March). Meanwhile mgt guided for 8-10% sales growth in FY24, in sync with our projections (and some c4% higher than consensus). 2024 has started on a healthy note, with monthly sales +4% on tough comps.
CCH // CCH announced the appointment of A. Stamoulis as Group CFO with effect from 1st May 2024. The group was in search of a new CFO after the announcement for the stepping down of B. Almanzar. Mr. Stamoulis has a long track record with CCH, having served as Group Financial Controller, Group Financial Operations and Head of Strategic Finance and FP&A.
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