*ΚΥΚΛΟΣ Χρηματιστηριακή Α.Ε.Π.Ε.Υ.* (http://www.cyclos.gr/)
* OTE (HTO GA) Q1 2024 results out this morning: EBITDA seen +1.2% y-o-y to €326m
* National Bank (ETE GA): 6-month lock-up for HFSF’s remaining 18.4% stake expires on 20 May
* MSCI to announce tonight the results of its May quarterly index review
* Cenergy (CENER GA) wins new steel pipes contract for Subsea7 North Sea offshore project
* Sarantis (SAR GA): Giannis Bouras appointed as new Group CEO
ATHEX headed south yesterday after four consecutive sessions with gains, in line with the European markets. In more detail, the General Index dropped by 0.54% at 1,476.12 units, (FTSE Large Cap: -0.70%, FTSE Mid Cap: -0.51%, Banks Index: -0.46%) and the traded value was shaped at EUR 120.6m, up from Friday’s EUR 112.2m. We expect the market to try to move higher today. MSCI will announce its quarterly index review tonight.
MSCI will announce its quarterly index review tonight
MSCI is scheduled to announce its quarterly indices review tonight.
Company Headlines
OTE || CP: EUR 14.09 | Rating: Neutral | TP: EUR 15.00
1Q24 results Preview | Higher top line but bottom line almost flat y-o-y
1Q24 results preview | OTE is set to release 1Q24 results today, before the opening of the market and management will host a conference call on the same day at 13:00 Athens/ 11:00 London Time. We expect a solid quarter, driven by an improvement on top line in Greece, but bottom line to increase marginally.
P & L | We project 1Q24 group revenues of EUR 837.8m (+4.1% y-o-y), adj. EBITDA after leases of EUR 328.1m (+1.4% y-o-y), and the respective margin to squeeze by 100bps to 39.2% vs. 40.2% in 1Q23. We also expect net profit for the year to shape at EUR 137.0m (+0.1% y-o-y). On the cost side, we expect OpEx to rise by 7.6% y-o-y and to reach EUR 498.8m, due to higher other op. expenses because of higher ICT revenues and energy costs. We have also assumed: a) depreciation expenses of EUR 160.7m (0% y-o-y), b) net financial expenses of EUR 2.3m and the effective tax rate at 23.0% vs. 22.8% in 1Q23.
Greece | We expect revenues to increase by 5.0% y-o-y to EUR 772.8m, on the back of higher top line from wholesale services (+4% y-o-y), mobile (+1.0% y-o-y) and other-ICT revenues (+20.0%). On the cost side, we anticipate OpEx to rise by 7.6% y-o-y due to higher other OpEx for the aforementioned reasons and a VES cost of EUR 7.0m. Hence, we estimate that adj. EBITDA (AL) will reach EUR 325.0m (+2.1% y-o-y), pointing to a profitability margin of 42.1% vs. 43.3% in 1Q23. Recall that international transit traffic revenues have zero margin.
Romania | We project revenues to reach EUR 65.0m (-5.8% y-o-y), on lower mobile service revenues (-5.6% y-o-y) and adj. EBITDA (AL) to stand at EUR 3.1m (-11.5% y-o-y), pointing to a profitability margin of 4.8% vs. 5.1% in 1Q23.
Optima view | The CC will be the last of current CEO Mr. Tsamaz who will be replaced by Mr. Nebis on 01 July 2024 and thus we don’t expect any major announcements until the new CEO takes over, apart from a colour on developments about the disposal of Telekom Romania Mobile. Recall that Mr. Nebis has been the CEO and President of the Management Board of Hrvatski Telekom, Deutsche Telekom majority owned company in Croatia, since April 2019 and prior to Hrvatski Telekom, he held the position of Chief Commercial Officer for Residential Customers in OTE Group and the position of Marketing Director in COSMOTE Greece. OTE is trading 4.8x EV/EBITDA24e, at a material 25% discount vs. EU telcos. Following the recent rally of the stock, we downgrade our recommendation to Neutral from Buy, as our TP points to a limited upside of just 4.4%.
Cenergy’s CPW granted a contract for the production of 39km pipes
Cenergy announced on its corporate website that it will manufacture and supply 39km steel pipes for an offshore project in the North Sea. The pipes will aim to reduce the carbon footprint of steel pipes produced using reduced CO2 steel certificates, in order to support its customers in reducing their indirect emissions.
GEKTERNA and TERNA SpA exit the Ariadne interconnection tender process (press)
According press, following the recent exit of Macquarie from the tender process for the acquisition of 20% in the Ariadne interconnection, which was replaced by the French Meridiam Europe, two qualified investors, namely GEKTERNA and TERNA SpA also exited the process. Following this development, two qualified investors (namely Merdian and Phaethon Holdings JV and State Grid International) continue in the binding offers phase of the tender for the acquisition of a 20% stake of Ariadne interconnection.
Jumbo corrected Greek April’s sales growth to 13% from 9%
The company posted a new press release with a correction for April’s sales growth of the parent company to 13% from 9% previously.
Aegean Airlines will trade ex-dividend on Monday 20 May
We note that Friday 17 May is the last day with the dividend right and the stock will trade ex-dividend on Monday 20 May. (DPS of EUR 0.75/sh, DY: 5.64%).
QUEST close to finalize the sale of ACS (press)
According to Naftemporiki.gr, ACS is close to finalize the sale of ACS, at an Enterprise Value EUR 300m (Book Value of equity at EUR 70m).
The market finished the day with modest losses down -0.5%, to a total of EUR 119m volume, while the banking sector also recorded a -0.4% drop, with most major banks on the red, Alpha Bank marking the biggest loss down -1.9% and Piraeus Bank flat +0.2%. On non-financials Ellaktor was up 2.6%, followed by Helleniq Energy (+2.1%) and Aegean Airlines (+1%), while PPA and Fourlis marked a 0.6% and c.0.5% increase. In the meantime, Sarantis underperformed down c.-2.6%, whereas OTE and GEKTERNA recorded a -2.3% and -1.5% loss.
MACRO – CORPORATE NEWS
POLITICS
Greek PM Kyriakos Mitsotakis met with Turkish President Recep Tayyip Erdogan. Topics of discussion, among others included migration, the war in the Middle East and the need to intensify bilateral contacts and cooperation in the future.
JUMBO <BELA GA, EW> CORRECT REPETITION
Company announced that from January until May 5th (Orthodox Easter holidays) Group sales increased +10% yoy. For the month of April,, Group sales stood 11% higher yoy, while management maintains its 2024 sales guidance at +8-10%. Per geographical breakdown, Greek sales in April rose 13% yoy (vs initial statement issued by the corporate), with Jan-April sales at +5% yoy. For the month of April, Cyprus remained broadly flat, while in the four month period starting January, sales are up 3% yoy. Sales in Bulgaria in April increased 7% yoy with Jan-April sales at +9% yoy. Last but not least, Romanian sales in April increased 10% yoy with Jan-Apr sales up 12% yoy. AGM scheduled for May 22nd to approve, among others, the distribution of the announced EUR 1.0/share (gross).
PPC GROUP <PPC GA, OW>
PPC announced the formation of the BoD following the election of two independent, non executive members.
HELLENIC TELECOM <HTO GA>
Hellenic Telecom is due to report 1Q24 results today before the opening. According to Bloomberg consensus, EBITDA is set to reach EUR 334m with net profit at EUR 132m.
The management will host a conference call also today at 13:00 Greek time.
Market Comment // Trading mostly in negative territory throughout the day, the ASE General index closed at 1,476.12 points (-0.54%) on Monday. Turnover landed at €119m, below the 100-day moving average of €135m. Sarantis (-2.59%), OTE (-2.36%) and Kri-Kri (-2.35%) led laggards, followed by Alpha Bank, Hellenic Exchanges, Gek Terna, Jumbo, Mytilineos, Terna Energy, PPC and ACAG (on >1% losses). On the flipside, Quest soared by 5.24%, followed by Ellaktor (+2.6%), HelleniQ Energy (+2.14%), Optima (+1.6%) and Aegean Airlines (+1.06%) while EYDAP, Profile, Fourlis, Motodynamics, Piraeus Bank, Cenergy and OPAP were also up <1%. %. Today markets look poised for a negative opening as markets brace for fresh inflation data and digest Fed officials’ comments.
OTE // Q1’24 results today pre market open; we expect a satisfactory start to the year, also helped by the easy comp, with adj. EBITDAaL +1.3% yoy at €326m. We expect revenues to be optically propelled by low-margin segments (international wholesale and ICT) but with core trends in mobile also providing support. Assuming modest VES costs, we anticipate Q1 net profit just slightly down yoy at €135m (-0.5%).
MSCI // MSCI index review announcement is scheduled for this evening. As a reminder, the MSCI Greece Standard Index currently consists of 10 stocks, namely OTE, OPAP, Jumbo, PPC, Eurobank, Alpha Bank, NBG, Piraeus Bank, Mytilineos and Motor Oil.
Profile // We add to our SME research program funded by the EBRD initiating coverage on Profile, a prominent financial software provider with strong international exposure and additional activities in Greek public sector digitization projects. The business is characterized by a c60% recurring base and >95% retention rates, with future prospects supported by a formidable €130m backlog (effectively securing revenues for the next 3 years). Profile enjoys one of the strongest growth profiles among EU peers (c21% revenue CAGR, c28% EBITDA CAGR through 2027e) thanks to secular tailwinds in financial solutions (market-wide SaaS transition, replacement of legacy front-office applications) and a boost from RRF/ESPA digitization funds to be released in Greece by 2026-27. The model is effectively self-financed thanks to the high recurring revenue base and healthy margins, allowing PROF to maintain consistent levels of R&D while building war chest for potential M&A. Despite surging c50% in 2023 and c20% ytd, the stock remains attractively valued at <10x 1-yr fwd EV/EBITDA, a >45% discount vs. EU IT peers. Our valuation is predicated on a blended methodology (DCF at 8.9% WACC and M&A-based component) and yields a PT of €6.5, placing PROF at <13x 1yr fwd EV/EBITDA, still at a c30% discount compared to the EU IT sector. Our research report is freely available here.
ADMIE Holding // According press two of the four interested parties, namely GEK Terna and Terna SpA, have withdrawn from the tender process for the 20% stake in “Ariadne Interconnection” (the SPV responsible for the Attica-Crete Interconnection). The remaining interested parties, StateGrid and the joint venture with Phaethon Holdings leading, must submit their binding offers by June 21st.
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