Friday, August 06, 2021- Βeta Securities: Market Monitor- Market Comment – In the Spotlight

Market Comment

Stocks ended higher breaking the key psychological level of 900-point, as the second quarter earnings performance by Piraeus and OTE provided the trigger for long positions. Piraeus reported solid underlying results while its de-risking efforts were confirmed that are fully on track. OTE witnessed robust revenue growth as the pandemic negative impact has started to subsidy. The two stocks made up the bulk of the day’s trading volumes.

The general share index added 0.9% to close at 903 points. FTSE25 expanded by 0.85 to 2,169.54 level with FTSE Mid Cap lagging -0.23% to end to 1,439.57 points. Notable movers were Piraeus +4.2%, NBG +2.3%, OTE +2.2%, Alpha +1.6%, Terna +1.6%. In total 72 stocks posted gains, 40 endured losses and 49 remained unchanged. Turnover amounted to €56.4mn, , up from Wednesday’s €43. nm.

The market will attempt to hover the 900 GI level threshold trying to digest and incorporate main financial results announcements from NBG, OTE, Piraeus Bank. Volatility with thin trading the trading pattern for today’s session.

 

¢    In the Spotlight

 

Greece/State Arrears: Greek state’s outstanding debts to third parties declined slightly m-o-m in June, reaching €1.8bn, data from the Finance Ministry showed. Unpaid tax refunds also dropped to €497mn down from €586mn in May.

PIRAEUS BANK: Piraeus Bank said August 6 is the last trading day during which its shares will trade with the right to participate in the distribution of shares issued by Phoenix Vega Mezz. The ex-date is set on Monday, August 9, 2021 and from that date onwards, the company’s shares will be traded on the Athens Stock Exchange with the new nominal value of 0.95 euros per share. The company’s share price will not be adjusted. Trading of the Phoenix Vega Mezz shares on the Athens bourse is expected commence August 12. In other related news Piraeus Bank said it has applied for opting in to the Hercules Asset Protection Scheme for the Sunrise II non-performing loan securitization securitizations with gross book value of €2.6bn. The application relates to the provision of a guarantee by the state on senior notes worth a total of up to €1.2bn.

ATHENS EXCHANGE: The Athens Stock Exchange is joining forces with the Belgrade Stock Exchange by acquiring a 10.24% stake in BELEX, while the latter will transfer its trading activities as market operator to the ATHEX’s trading platform, enlarging the Common Trading Platform pool of liquidity and services. “This cooperation is based on two principles: the mutual conviction that their respective capital markets should assume a more influencing role in the sustainable economic development of the local economies and the common vision that only by joining forces regional markets can efficiently and effectively address the intensifying challenges and enhance the offering to issuers, both in the EU and internationally,” ATHEX said ina bourse filing. Also, BELEX and ATHEX will closely cooperate with the Serbian Government – Ministry of Finance towards the enhancement of the Serbian Capital Market through the introduction of new products and services that will support the flow of capital from investors from local and international investors to issuers listed in BELEX.

INTRALOT: The company announced yesterday the completion of the agreement with noteholders for debt restructuring. New notes were issued replacing old ones that were cancelled and total deleverage amounted to €163mn. In specific regarding the 2021 notes, on August 3, 2021, new Notes with a nominal value of $242,111,911 due September 2025 were issued by US based Intralot, Inc., in exchange for existing Notes maturing in September 2021 with nominal value of €247,471,724.07 (corresponding to an 18% discount), which were cancelled. The transfer of shares from Intralot Global Holdings B.V., amounting to 34.27% of the share capital of Intralot US Securities B.V. (indirect parent of Intralot, Inc.), to the holders of existing 2024 Notes with a nominal value of €118,240,000 who participated in the exchange. Following the above procedure, these Notes came to the possession of Intralot Global Holdings B.V. Intralot retains control of 65.73% of Intralot, Inc. and the management of the company.

MYTILINEOS: On august 4, the company bought 10,516 shares at €15.6001/share for a total consideration of €164.050K. Total treasury at 4.9066% of share capital or 7,011,049 shares.

ELLAKTOR: In a filling to ASE Greehnill clarified that’s its stake in Ellaktor stands at 26.6751%.

OTE (Q2/H1:21 review): The company reported a strong set of Q2:21 performance, as the negative effects from the pandemic started to subsidy. Profits were up 42.9% y-o-y to €120.6mn. Robust top-line growth in Greece underscored the reasoning for the solid performance. The incumbent reiterated its full-year guidance for adjusted free-cash-flow of €575mn and reported FCF of €480mn, which also represents the total shareholder remuneration amount for 2021, a 20% increase compared to the prior year. Revenues increased by 8.0% in the second quarter to €827.5mn. Adjusted EBITDA rose 6.9% to €310.4mn, yielding a margin of 37.5%, on positive performance in both Greece and Romania mobile.

·        In Greece, adjusted EBITDA (AL) improved sharply, up 6.5%, to €303.7mn, resulting in a 40.0% margin. In Greece, revenues continued to rise for a third consecutive quarter and were up 9.6% to €758.7mn, as the authorities eased health restrictions during the quarter. Continuing recovery in Greece with positive performances across the board, helped by favorable comparison against pandemic-impacted Q2:20. Operating trends recorded: 1) 10% topline growth on service revenue momentum and higher handset sales, 2) 7.4% increase in mobile service revenues with roaming rebounding, 3) Dynamic operational trends—broadband supported by demand for higher speeds

·        In Romania, revenues from continuing operations posted an improving trend, down 5.6% at €74.7mn in the quarter, “and are on track to meet targets in the second half,” OTE said. Romania mobile operations recorded an adjusted EBITDA (AL) of €6.7mn, up 26.4% “as a result of disciplined cost management,” OTE said in its results statement.

·        Group adjusted FCF after leases reached €162.8mn, while FCF stood at €157.4mn, up €29.9mn year on year.

·        Adjusted Net Debt stood at €786.7mn as of June 30, down 7.2% compared to the year-ago period.

·        For 2021, management expects Adjusted Group CAPEX of approximately €550mn and Adjusted Free Cash Flow of approximately €575mn.

·        €480mn shareholder return guidance for FY 2021 confirmed (excluding additional reward from Telekom Romania operations disposal), a 20% rise y-o-y.

·        Conditional EU approval of Telekom Romania (Fixed) disposal granted giving a further €0.3-€0.4/share reward remuneration.

·        OTE generated an excess €80mn amount during the period 2018-2020 reflecting better-than-projected cash flow performance. This amount in the near term has been reserved against potential adverse impacts from the health crisis. Given a normalization of the operating environment, management guided on the distribution of this excess amount, together with any surplus generated in 2021 in 2022 to shareholders.

·        In other related news over the period July 30 to August 5, the company bought 198,827 shares at €15.4488/share for a total consideration of €3.866mn. Treasury stands at 3,379,468 shares or 0.74% of share capital.

The following table summarizes OTE Q2/H1:21 financial performance vs consensus estimates:

ΟΤΕ

2020

2021

Y-o-Y

2020

Act. vs

2020

2021

Y-o-Y

2020

Act. vs

EUR m.

Η1

Η1

(%)

FY Est.

Est.

Q2

Q2

(%)

Q4

Est.

Sales

1,563.4

1,615.4

3.3% 

1,588.0

1.7% 

766.1

827.5

8.0% 

800.1

3.4% 

EBITDA

575.5

648.9

12.8% 

615.0

5.5% 

279.0

347.7

24.6% 

313.8

10.8% 

EBITDA Mrg

-22.5%

40.2%

+6,267 bps

38.7%

+144 bps

36.4%

42.0%

+560 bps

39.2%

+280 bps

Net Income

181.0

222.0

22.7%

230.00

-3.5%

84.4

120.6

42.9%

128.6

-6.2%

Net Mrg

11.6%

13.7%

+217 bps

14.5%

-74 bps

11.0%

14.6%

+356 bps

16.1%

-150 bps

 

NBG (Q2/H1:21 review):  National Bank reported an in line set of Q2:21 performance characterized by lower trading gains, cost reduction (personnel mainly) and optimization and core income recovery. Profits from continuing operations of €45mn in the Q2:21, with core pre-provision income rising 6% q-o-q to €182mn. In the first quarter, NBG had reported profits of €578mn buoyed by trading gains of €491mn arising mostly from its GGBs portfolio. In the second quarter, the bank registered losses of €42mn from trading transactions.

·        Fee recovery accelerated in 2Q21 (+4% qoq) in the absence of restrictive measures, driving 1H21 fees up by 10% yoy to €136m

·        Q2:21 NII increased by 9% yoy to €297m, driven by sustained time deposit repricing and ECB’s TLTRO III facility.

·        The sharp reduction in personnel expenses in Greece (-15% yoy) pushes costs down by a solid 8% in 1H21; domestic C:CI improves by 9ppts yoy to 51.0% in 1H21.

·        Trading and other income of €449m in 1H21 benefited from sizable gains related to debt securities transactions (mostly GGBs)

·        Loan impairments amounted to €70m in 2Q21, bringing 1H21 impairments at €147m, equal to 109bps over net loans

·        Core operating profit1 surged by 58% yoy to €208m, reflecting core income recovery and further cost optimization.

·        NPE reduction continued in the Q2:21, with the stock of domestic NPEs down by €0.1bn qoq to €4bn, reflecting organic actions. “Organic NPE reduction reached €0.2bn in 1H21, providing reassurance with regards to our 2021-2022 guidance calling for cumulative organic NPE reduction of around €0.8bn,” the bank said.

·        NPE ratio of 12.8%3 in Greece (-c50bps qoq) and at 12.7%3 at the Group level; domestic NPE coverage at 66.4%, up c360bps ytd (66.8% at the Group level).

·        Payment performance of ex moratoria performing clients remains far better than expected, with only c3% in default as of July 2021 and just 1% currently in early arrears (>30dpd)., NBG noted. “Moreover, c60% of performing moratoria beneficiaries remain low risk and thus have received no subsequent payment relief,” it said. Domestic NPE ratio dropped by around 50bps q-o-q to 12.8% with NPE coverage at 66.4% from 64.8% in the previous quarter.

·        CET1 settled 30bps higher ytd, at 16.0% or at 13.8% on a fully loaded basis. Total capital ratio (CAD) reached 17.0% exceeding minimum regulatory levels by around 600bps. “Upon completion, Frontier and Ethniki Insurance transactions will boost total capital ratio by c170bps vs current levels to c18.8%, NBG said.

·        Domestic PE loan portfolio momentum is maintained (+€1.2b yoy), largely driven by corporate PEs (+€1.5b yoy), while retail PEs deleveraging slows down.

·        Group deposits amounted to €51.1bn in the second quarter, up by 6.0% q-o-q.

The following table summarizes NBG’s Q2:21 financial performance vs our estimates:

 

NBG

Act.

Act.

Act.

Latest read

Overview

Est.

(In Million Euro)

2Q:20

1Q21

2Q21

QoQ

YoY

2Q21

vs Est.

NII

273

294

297

1.1%

9.0%

295

0.7%

Fee income

57

67

69

3.3%

21.1%

68

1.5%

Trading Income

23

511

0

Insurance/Other Income

-11

-20

-42

-115.4%

-300.0%

-35

Total income

341.9

851.5

325.0

-61.8%

-4.9%

328.0

-0.9%

Operating costs

-199

-189

-185

2.1%

7.0%

-188

1.6%

Pre-provision-profits

142.9

662.5

140.0

-78.9%

-2.0%

140.0

0.0%

Provisions

-76

-77

-70

8.7%

8.4%

-75

6.7%

Other results

-18

-6

-23

-296.6%

-31.4%

-10

PBT

49.0

581.0

47.0

-91.9%

-4.1%

55.0

-14.5%

Corporate taxes

3

-3

-2

28.6%

-166.7%

0

Net profit (continued)

46

577

45

-92.2%

-2.2%

55

-18.2%

Discontinued operations

10

-19

-27

-42.1%

-19

Net profit

56

558

18

-96.8%

-67.9%

36

-50.0%

Minorities

0

-1

0

-1

Attributable net profit

56

557

18

-96.8%

-67.9%

35

-48.6%

 

GEK TERNA: The company bought on August 4 12K shares at €9.5018/share for a total consideration of €114.021K.

PROFILE: On August 4, Profile bought 1.5K shares at €5.02/share for €7.53K.

THRACE PLASTICS: On August 4, the company bought 1K shares at €7.68/share for a total consideration of €7.68K.

NEWSPHONE: ANCOSTAR filled for its entitled squeeze out right for the remainder 6.3% in the company it does not control (1,747,065 shares).

FOURLIS: Marathon Asset Management’s stake dropped below the 5% threshold at 4.99%.

REAL CONSULTING: As of August 6, 2021, the 21,500,000 (CR) shares of the Company “are admitted to trading on the “ΕΝ.A. PLUS” of ATHEX, under the “Technology” sector. The start price of trading is set at €1.02.

Kind Regards, 

John Kalogeropoulos

Equity Analyst 

29 Alexandras Avenue

11473 Athens,Greece

Tel: +30 210 6478751

Email: ikalogeropoulos@beta.gr

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